I absolutely agree that "trust" is the issue. Which makes it so surprising that Secretary Paulson chose an approach that comes with such poor signaling on that front. I understand that that's how they do things at Goldman. But at Goldman we all understand how you get measured in executing your discretion. And what happens when you fail. Instead of making the $700B something he alone had discretion to invest, and exempting himself from any form of regulatory or judicial review, he might have taken the opportunity to enlist the good name of some of the nation's financial philosopher kings. Maybe ask Bogle, Buffet, Gross et al to run this money for the good of us all. Or better yet, maybe accept that trust ain't coming no matter who you get, and put together a structure that relies on greed. But certainly don't ask us to believe that giving a lame duck cabinet member a blank check is a good idea.

It is hard to trust someone who has not demonstrated great judgment regarding the crisis in the past year and who has incentives to bailout Wall Street executives at the expense of taxpayers. Remember Paulson is only in office for another four months, unless the next President decides to reappoint him. I have seen no indication from either McCain or Obama that they would do so. This means he either will try to go back to his old position at Goldman Sachs or seek a similar position at another financial conglomerate. He doesn't strike me as someone who plans to completely retire after his term as Treasury Secretary is over. This might be part of the reason he is resisting curbs on executive compensation for officers of companies that the US government bails out. He might find his reception back in New York considerably less warm if he let those curbs go through.

In addition, once Paulson is gone, we have no idea who will replace him. The proposal originally was for a 2 year term. This means Congress was being asked to give unfettered power to a completely unknown quantity. Yes, the next Treasury Secretary would have to be approved by the Congress. Long drawn out confirmation hearings trying to ascertain what the new person would do with all that power and whether we can trust that person to be responsible and wise are problematic. It is questionable whether the information gained would be a good predictor of what that person would do. Confirmation hearings for Supreme Court Justices have not always provided a clear picture of how they would act once they were on the bench.

As I understand it, there is no difference between "the details" and "trust," because the absence of details in itself creates the necessity for extreme trust.

The financial philosopher-kings idea is intriguing, but it seems hard to pry these guys away from their businesses to execute that function, and if they stay involved with their businesses they have pretty serious conflicts (Gross being an obvious one).

You guys have hit on the reason that Glass-Steagal was passed after the debacle of 1929: You cannot trust people ... period.

Our regulatory environment cannot and should not be based on trust.

When you allow banks to own securities, then mark-to-market becomes a requirement. Otherwise the owners of the bank have to trust the bank managers' estimations of the value of the underlying securities.

And bank managers have proven that they cannot be trusted with the capital that belongs to the owners.

The flipside is that once bank capital requirements are placed at the mercy of mark-to-market, a significantly higher rate of insolvencies are guaranteed by the business cycle.

Insolvencies create distrust in the banking system by the depositors.

The ONLY solution is to return to the regulatory environment that creates trust; by preventing banks from gambling with their capital in the securities markets.

The response by the government in 1929 was the correct response. It imposed discipline in a market that always proves that without rules, it will resort to theft of the highest order.

Trust runs both ways, of course. What is it, precisely, that senators need to 'trust' in the administration or the Treasury secretary? Perhaps if those in Congress had done their jobs, they wouldn't need to muster so much trust and could rely instead on the sound policies they put into place. But that's not the case. Folks in Congress are concerned about trust, to be sure, trust in other people to fix the mess that their own ineptitude and inaction created. The administration is taking a lot of heat (richly deserved, I might add), but so much of what we're attempting to fix here is as much a result of Congressional incompetence as anything else.