Kevin Drum is right to remind that Paulson didn't exactly give Bear Stearns, AIG, or Lehman, sweetheart deals. "See," says Kevin, "Paulson is a creature of Wall Street. And the way you become successful on the Street is not just by being the smartest guy in the room, but by being the toughest guy in the room; the guy who drives harder bargains than anyone else and always comes out on top. The top execs on Wall Street might be arrogant, they might be crazy, and they might be greedy, but they play a testosterone-fueled game to win. This is practically their religion." But that just brings us back to the original sin of this whole bailout plan: Paulson's initial draft. It wasn't a draft that included equity, or CEO pay limits, or really anything else where the government would have been driving a hard bargain. Compared to the deals Paulson had forced on AIG and Bear Stearns, this was a kindler, gentler, bailout. The sort of bailout you could have taken to the Goldman-Sachs office Christmas Party. Now, you can make an argument that this document was a product of bad political advice. It's easy to imagine some operative advising Paulson to accept that Congress needed to build this themselves, and Paulson's best best was to give them some spare document with a skeletal outline of his plan and let them flesh it out. If so, this just turned out to be very bad advice that didn't end with consensus legislation and made everyone mistrust Paulson. Or you can assume that his political advisers were so bad and inept that they thought he could actually get his dream bill and that three page document naming him economic czar was his wish list put down on paper. The evidence could cut in either direction. I'm not prepared to trust Paulson's instincts quite yet. But so what? In all likelihood, the guy's got a couple more months on the job. The majority of the work will be done by his successor. Even so, I'm getting a lot of e-mails comparing Paulson to Powell and the bailout to the Iraq War. And I see the visceral appeal of the analogy. That legislative process was also defined by speed, fear, pressure, and an assertion of certainty around a variety of unknown factors. They feel similar. Fool me once and all that. But the analogy doesn't really hold. There weren't weapons of mass destruction. Even if there had been, the Iraq War would have been unjust and unwise. Few who make the comparison, though, are saying there is not a financial crisis, nor are they saying that there is no chance that the credit markets -- which are already in transparent and obvious danger -- will seize up. And unlike with Iraq, if we are headed towards a credit collapse, if the warnings are right, then massive and rapid intervention to forestall that possibility is crucial. Which is why folks like Galbraith and Krugman and Kuttner -- all of whom opposed the Iraq War and loathe this administration -- are reluctantly in favor of a bill. Could the bill be better? Sure could. But it's not clear that it could be much better given the current composition of Congress and the administration. And that's what we have to work with. It may be that you're willing to risk waiting four (or more) months and hoping for a better government, but then the argument isn't about Paulson so much as whether the credit system can endure the interim uncertainty.
