I've danced around this point a bit, but a friend made an observation to me last night that I found fairly clarifying. I'm paraphrasing from conversation, but the problem with assessing the bailout plans, he said, is that this really is very complicated, and the only people who understand it have substantial Wall Street experience. But those people are so socially and professionally intertwined with Wall Street that they can't possibly be objective about their friends or the system. If only Wall Street knows enough to fix Wall Street, then you can hardly be surprised when Wall Street's interests come out fairly well in the bargain. That's not a matter of corruption so much as perspective: Wall Street, as it once stood, is firmly embedded in the architecture of their mental economic model. That goes, of course, double for the actual bankers the Obama administration has invited into the regulatory process. Saying that our regulators are captured is not the same thing as saying that their answers are wrong. The direct problem it presents is credibility, which creates a secondary problem of analysis. Only the government has access to the full data set -- the stress tests and the FDIC's self-assessment of capabilities and the bank books and the Federal Reserve information and all the rest. A lot comes down to how much you trust that the government is analyzing that information correctly and using it wisely and presenting it to people who are equipped to assess it objectively. It's part of why I find it hard to come to a firm conclusion on what should be done. Not only are the issues complicated, but so too are the players, and their biases.
