Paulson on Bended Knee: Why the Urgency?

Last Updated Sep 30, 2008 3:05 AM EDT

Imagine Treasury Secretary Hank Paulson down on bended knee before House Speaker Nancy Pelosi. He's begging for his $700 billion bailout. Pelosi, a Democrat stalwart, blames the Republicans in the House of Representatives. Paulson replies meekly: "I know, I know."

At least there was a little comic relief when the deal that was supposed to be... wasn't. It famously didn't come together in the White House Thursday night after George W. Bush was abandoned by underling congressmen in his own party.

Adding to the tension over the lack of party discipline was John McCain. With great drama, the Republican suspended his presidential campaign to play dealmaker and perhaps avoid tonight's debate with Barack Obama (which, as it turns, out is still on).

Strange doings over a very serious issue.

But one has to ask why it is so imperative that a deal get done on precisely on the evening of Friday, Sept. 26, 2008?

The conventional wisdom seems to be on both the right and left wing that a bailout is needed. Yet there's plenty of disagreement on how something this massive should be handled and how quickly.

The renegade Republicans are looking for ways other than public money to fund the bad loans which may total about $1.2 trillion. Doing so may not be a bad idea. Being typical GOPers, however, they also are throwing in tax breaks for capital gains -- anything to give the rich another little advantage.

One worthy idea from the other side of aisle is offering the beleagured Common Man/Woman mortgage holder some kind of relief, as Sen. Hillary Clinton has argued. This goes to the heart of the problem since if you can repair damaged mortgages, things get better overall. If Paulson's plan fails and the predicted economic firestorm occurs, then plenty more families will be unable to pay their mortgages and the problem will be far greater.

Paulson, however, is of Wall Street and sees things through that prism. His demands for haste could be explained this way: each day there's no deal, his buddy financiers lose billions in loan service payments and stock markets suffer.

My view is, gee, that's too bad. Didn't Wall Street cause this problem? If there has to be a bailout, and plenty of serious economists wonder how much and whether it is worth it, why not take the extra time needed to get it right?