A Simple Explanation for the Bailout
Over the weekend, Senator Jim Inhofe (R-OK), who voted against the bailout, criticized Treasury Secretary Paulson for “not telling the truth” about what Treasury would do with the bailout money. As I posted here, I don’t buy this at all. If the intent was as specific as Inhofe seems to think it was, there was no reason to have “any other financial instrument” in the text of the bill.
Regardless, this is what Inhofe said:
“It is just outrageous that the American people don’t know that Congress doesn’t know how much money he (Treasury Secretary Henry Paulson) has given away to anyone,” the Oklahoma Republican told the Tulsa World. “It could be to his friends. It could be to anybody else. We don’t know. There is no way of knowing.”
I can’t be certain, but it’s almost as if Inhofe was referring to Paulson’s “friends” in an off-hand manner. But I wonder, is there a simple rent-seeking story here? Paulson, after all, was an investment banker, starting at Goldman Sachs in 1974, and ending up its CEO in the late 1990’s. And, we know that the current crisis showed up in the investment banks, not the commercial banks. We even know that some in the commercial banking industry didn’t want any part of the bailout money.
Could the explanation for this bill be as simple as: investment bankers went to Paulson for help with their financial problems?
NM