Sunday, September 21, 2008

Conflicts of Interest for the Bailout Plan

McCain adviser Martin Feldstein was the runner-up for the Fed chairmanship, the job now held by Ben Bernanke. When the AIG bailout was announced, I wondered if it would have been possible had Feldstein been heading the Fed, given that he has been on AIG's board since 1988. What would Feldstein have done? Bowed out and let Vice Chair Don Kohn take over?

And yet, Treasury Secretary Paulson now has conflicts of interest that are at least as great. He's the former CEO of Goldman Sachs, and as Yglesias points out, he'll be unemployed in just 4 months time and presumably looking for a new job with a Wall Street company. How could Congress possibly give him $700,000,000,000 to buy bad debt of his choice from companies that will include his former and probably also his very-soon-in-the-future employers?

1 comment:

Virginia said...

Yes, we should not forget good government principles no matter how much the Secretary of Treasury holds a gun to our heads.

I don't see why the bailout has to be done by the Secretary; the Fed is experienced in similar matters (feeding liquidity to the markets) and there's no reason a bipartisan commission to ADVISE the Secretary would slow things down a whit.