September 23, 2008
Trusting Paulson
Posted by Gordon Smith

No one likes The Paulson Plan. If you don't enjoy CSPAN, you won't think much of the following video of hearings before the Senate Banking Committee, and I admit that most of it is pretty dull. But you can hear a few drumbeats: why should the taxpayers pay for this? what about people who need help with their mortgages? why should those who got us into this mess not have restrictions on their compensation? where is the oversight?

You also hear occasional references to future changes in the regulatory system ("complete overhaul" were the words used by one member of the Committee).

And then there was this question from Senator Robert Menendez (New Jersey): "How many times can the administration be wrong and still instill confidence?"

Isn't that really the heart of the matter? We simply don't trust Paulson, Bernanke, Cox, etc. to get this right. Last week, Robert Reich asserted, "The crisis on Wall Street right now is less about solvency and about capital than it is about trust. And the real question is, How do you restore trust to a system in which, basically, nobody trusts the numbers that are supplied by big banks on securities?" The question this week is, How do you restore trust to a system when we don't trust those who are trying to intervene? My sense is that this lack of trust, more than the details of the Paulson Plan, lies at the heart of the widespread discontent with the proposal.

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