Three Ideas for Fixing the Crisis

How should we go about fixing the financial meltdown and ensuring it doesn't happen again? The Bush Administration wants massive bailouts of financial corporations based on the decisions of one man, Treasury Secretary Henry Paulson. John McCain wants to fire the Chairman of the Securities and Exchange Commission and complains about how greedy too many business people are and how much money some of the heads of these companies make. Barack Obama says we need clear and firm rules about what is permissible and what is not, and insists that all expenditures of money such as for bailouts, be taken to Congress for their approval on a case by case basis. Both McCain and Obama call for greater "transparency."

The Administration case represents its normal advocacy of unlimited executive power. As usual, one man is to make decisions without accountability to anyone. The legislation presented specifically states that the Secretary's decisions may not be appealed in court and are not subject to congressional approval. If there is a difference between this kind of decision-making and a dictatorship I would like to know what it is. And it is not as though this Administration's decisions have been so sterling as to give it the benefit of the doubt. Hopefully, congress will not be stampeded once again into passing something based on breathless panic-mongering that the nation will later regret. These proposals should be rejected out of hand.

McCain's prescriptions are strangely off the point. They personalize the problem, as though one man's firing could reform the lending practices of companies he does not work for. They state the obvious, that business people are greedy (duh) and that executives have made enormous salaries while leading firms into disaster due to aggressively lending money to people without the means to pay it back other than an expectation of the endlessly escalating value of their homes. Does the Senator advocate passing laws telling business people not to be so greedy, or companies how much they may pay their executives? Certainly not. In fact, his comments on the matter offer no solution at all. They are merely grousing. In truth, what more can a "fundamental deregulator" offer?

Obama's opinion that firm rules need to be established more realistically gets to the heart of the matter. If by that he means that some basic qualifications should be met before a loan may be approved, and that derivatives should be regulated as strictly as market transactions, he is on the right track. Though it would be nice to see more specificity from him, Obama's basic approach is certainly what the situation cries out for. Merely jawboning traders not to be so greedy is about as effective as beseeching football players not to be so violent. Without clear penalties, mayhem reigns. His other point that the Constitution rather than authoritarian fiat ought to be followed, is similarly refreshing. There is no reason to allow this to be another opportunity for the Bush Administration to use it to further erode the checks and balances set up to safeguard our liberty.