TARP, baby!

A mostly political Weblog.
Oct. 1 2008 10:09 PM

TARP, Baby!

Explaining Paulson's plan better than Paulson.

TARP, Baby! Veteran Fannie Mae critic David Smith builds on Andy Kessler to explain why Paulson's "troubled-asset" purchase plan may make sense. The taxpayers could even make so much money that the governement could fund ... national health care! (Take that, Jim Lehrer.) ... As usual, Smith's post is exceptionally easy to follow for those (like me) who don't understand fancy financials. ... It's a particularly useful antidote to Krugman's critique--which seems to assume, in at least one of its forms, that the government will only pay the current, going, distressed market price for the assets it buys. Smith argues it could pay more than this going, "immediate" "market" value and still a) be driving a reasonably hard bargain, b) boost the economy by freeing up capital, and c) make money down the road. ... In part that's because the market in "troubled assets" isn't completely rational right now, something that shouldn't surprise leftish economists. In part it's because, as Smith and Kessler note, the government (unlike an ordinary purchaser) can goose the economy to make sure its "troubled assets" regain some of their value. ... Two obvious problems: 1) Goosing the economy usually means inflation. Kessler is not wildly convincing on why this isn't a threat; 2) Smith seems to assume that of course real estate will bounce back if the economy does. But why? A bubble is a bubble. A growing economy didn't bring back the tech stocks that were overpriced in the 90s--unless someone got rich off their old Pseudo.com stake without telling me. ... 5:11 P.M. link

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Monday, September 29, 2008

If Nancy Pelosi had wanted to screw Sen. McCain, could she have done a better job? Just asking! ... 8:19 P.M.

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Mo' Rezko: He "has been quietly visiting Chicago's federal courthouse, setting off" ... you know. ... speculation! ... [Do you really think Rezko is going to impact the election?--ed Seems unlikely. I have no inside info. But a contingency worth following.] 7:08 P.M.

Stunt Gridlock? This week's obvious game-changin' stunt for McCain to pull would be opposing the bailout bill, as Dick Morris advises.** But McCain probably can't pull that stunt because of Last Week's Stunt, which involved McCain dramatically trying to delay a debate while he parachuted into Washington to save the bailout bill. .... If the end result was a bad bill, then McCain didn't do much of a salvation job, did he? He's seemingly trapped--and it would be hard to weasel out of  his almost-endorsement of the current deal yesterday on Stephanopoulos.. But he must be sorely tempted to follow Morris' advice. ...

**--This wouldn't necessarily involve irresponsibly scuttling the bill. McCain could rail against provisions that he claimed would send taxpayer money to Wall Street malefactors, get the benefit of popular backing, and then settle for a few more changes in the legislation. Newt Gingrich pulled that stunt during budget talkes in George H.W. Bush's presidency, if I recall. (And House Republicans may already have pulled a similar stunt this past week--depending on whether you believe the modifications they were able to make represented a tremendous improvement.) Morris, for his part, admits that the changes he'd have McCain advocate are "largely cosmetic." ... 1:59 A.M. link

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McCain sure brought those House Republicans along, didn't he. They love him over there! ... P.S.: The failure of the bailout in the House today helps Obama, no? The longer economic turmoil leads the news, the longer Obama gains an advantage--at least that is the pattern so far. ... P.P.S.: Just as the vote vindicates McCain's declaration, last Wednesday, that the bailout bill was in deep trouble (despite Dem announcements of a "deal") it undermines his claim to have saved the day. ... [If the bill really was in trouble, why were McCain's actions last week a "stunt"?--ed The stunt wasn't spotting the trouble. The stunt was trying to delay the debate. Whether McCain's intervention helped or hurt the negotiations, nothing required him to punt on the debate. One bit of evidence, of course, is that, in the end he didn't punt on the debate, and did fine.] ... 11:32 A.M. link

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The L.A. Daily News on its city's seeming unshrinkable downtown education bureaucracy:

[A] Daily News review of salaries and staffing shows LAUSD's bureaucracy ballooned by nearly 20 percent from 2001 to 2007. Over the same period, 500 teaching positions were cut and enrollment dropped by 6 percent.

Also "2,400 administrators ... earn more than $100,000 annually." Want to fire some of the less useful ones? Ah, they have "'bumping' rights to displace other workers." ... 2:29 A.M.

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McCain's Stunt Gridlock? This week's obvious game-changin' stunt for McCain to pull would be opposing the unpopular bailout bill, as Dick Morris advises.** But McCain probably can't pull that stunt because of Last Week's Stunt, which involved McCain dramatically trying to delay a debate while he parachuted into Washington to save the bailout bill. .... If the end result was a bad bill, then McCain didn't do much of a salvation job, did he? He's seemingly trapped--and it would be hard to weasel out of his almost-endorsement of the current deal yesterday on Stephanopoulos.. But he must be sorely tempted to follow Morris' advice. ...

**--This wouldn't necessarily involve irresponsibly scuttling the bill. McCain could rail against provisions that he claimed would send taxpayer money to Wall Street malefactors, get the benefit of popular backing, and then settle for a few more changes in the legislation. Newt Gingrich pulled that stunt during budget talkes in George H.W. Bush's presidency, if I recall. (And House Republicans may already have pulled a similar stunt this past week--depending on whether you believe the modifications they were able to make represented a tremendous improvement.) Morris, for his part, admits that the changes he'd have McCain advocate are "largely cosmetic." ... 1:59 A.M. link

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Sunday, September 28, 2008

I was about to write an item about how Kirsten Powers has been producing an alarming number  of  good columns lately, when I hit this sentence:

[T]he fact that someone of Biden's experience and intellect can make as many gaffes as he has since joining the ticket shows how treacherous the presidential trail is.

1:57 A.M.

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Fitzmas in Reverse, Update: More  drama--Tony Rezko's "possible change of heart:"

"Rezko ...met with federal prosecutors and is considering cooperating in the corruption probe of the governor's administration, sources told the Tribune." ...

Or are prosecutors just bluffing (trying to spook other potential witnesses)? ... Or is Rezko merely trying to send some sort of alarm?... Just speculating! ... As Steve Bartin  and the Trib note, Rezko previously complained that prosecutors were pressuring him "to tell them the 'wrong' things that I supposedly know about ... Senator Obama." ... Rezko also said at the time that he's "never been party to any wrongdoing that involved" Obama, and pledged not to "fabricate lies." ... But, speaking completely hypothetically, even inaccurate testimony, by Rezko or anyone else, that seemed to implicate Obama in something fishy could, if precisely timed, do a lot of damage. (Note that, in theory, before it got out it would have to be credible enough for prosecutors to actually believe it). ...

P.S.: Too interesting  for  The Curve! ... 8:29 P.M. link

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Friday, September 26, 2008

I've just heard Chris Matthews make three seemingly insane points in rapid succession: 1) McCain somehow defamed soldiers or America or something by worrying about whether they "died in vain"; 2) It was surprising that Obama didn't make a point of the specific economic problems of African Americans; 3) It was an incredibly winning, decisive moment when Obama laughed after McCain (somewhat effectively, I thought) compared his inflexibility to Bush's. ... That's not even getting to the official MSNBC obsession with whether McCain looked at Obama when he criticized him. ...

Update: Matthews just asked John Heilemann about McCain: "Do you think he was too troll-like tonight? You know, too much of a troll?" ... 9:52 P.M.

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Debate #1: Before I get spun, I'd say: small, Pyrrhic victory for McCain. McCain wanted to make Obama seem naive and inexperienced. He did about 40% of that. Obama wanted to make McCain seem dangerously ambitious, bellicose and hotheaded. He did 0% of that. But a) the foreign policy stuff came after a long period on the economy, where McCain seemed a bit frenetic and Obama had the upper hand; and b) Obama didn't seem non-credible, which may be enough to carry him through given all the other advantages he has. ..

More: c) When Obama talks about the struggling middle class, etc., he always says "they" (seems distant) or "you" (seems condescending). Why not "we" or "us."? Or "my buddy Joe down the street"? A core problem, and one that shouldn't be that hard to fix; d) The big areas where Obama could scare voters about McCain are Georgia/Ukraine/Russia and Iran. On Georgia, Obama threw away his leverage by essentially moving toward McCain's position, up to including Georgia in NATO. I guess we really are all Georgians now. On Iran, McCain didn't say anything particularly scary--if anything, he seemed able to dispel some of those legitimate fears, Reagan-style.He achieved that effect even more clearly on Pakistan:

[I]f you're going to aim a gun at somebody, George Shultz, our great secretary of state, told me once, you'd better be prepared to pull the trigger. ...

I'm not prepared at this time to cut off aid to Pakistan. So I'm not prepared to threaten it ...

(e) Even more important, Obama did little to bring home what a nightmare the last six years have been for Americans, since the decision to attack Iraq. Wasn't there something sound-bitey he could have prepared? ("Do you want to go through another eight years like the last eight?")  f) McCain has that candidates' shorthand disease--when he recycles old campaign rhetoric he so sick of it he shortens it down to code words: "Pen. Veto. I'll make them famous." If you weren't already sick of the rhetoric you probably didn't have the faintest idea what he was saying. (When I worked for Sen. Hollings, it seemed as if by the end of the campaign he'd invoke an old chestnut from Pogo by barking "Pogo. The enemy! Us!") g) McCain could have effectively hit Obama on his big spending plans ("$800 billion") earlier and harder. Maybe this wasn't the right week to make $800 billion seem like a big number. ... h) I don't understand the difference between "strategy" and "tactics." Is there something wrong with me? ...

P.S.: Jim Lehrer ostentatiously noted that he wanted the candidates to mix it up. But every time they began mixing it up it seemed as if Lehrer interrupted them to cut the argument off. Too interesting!  ...

Post-spin Update:i) Does Keith Olbermann's show make it seem like their guy must have lost because their guy lost--they sound like the Politburo meeting after the Cuban Missile Crisis--or would Keith Olbermann's show make it seem like their guy must have lost even when their guy won?  ...

j) If actual undecided voters who watched the debate favored Obama, as this CBS poll  suggests, is that because, after the events of the past week, they were just looking for Obama to pass a threshold test? Add if that's the case, how would McCain now be doing if he'd just gone ahead and had this debate, and done as well as he did, without pulling The Stunt first? (Whether you think McCain's trip to Washington helped or hurt the chances of resolving the current financial crisis, it seems clear he could have gone to D.C. and had whatever influence he had without trying to delay the debate. Think how good that would have looked.) ... 7:43 P.M. link

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Thursday, September 25, 2008

The Refs Dream They're Being Worked: When McCain's campaign attacks the press, he's not "working the refs." That implies McCain's strategists still care how the "refs" make calls. I think it's pretty clear they're doing something else  (and they're perfectly happy if the refs keep making calls against them). ... P.S.: Of course the MSM "refs" like to think McCain's "working the refs," because that implies they're worth working--that their refereeing role is still all-important (as opposed to their role as, say, a totemic focus of political, class and cultural resentment!)... 3:50 P.M. link

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The Palin-lovin' conservatives at GetDrunk on the McCain bailout/debate delay maneuver:

Not that anybody asked us, but we think this is nonsense.

P.S.: If McCain is driving pro-Obama pundits crazy, what has he done to Newt Gingrich?

"This is the greatest single act of responsibility ever taken by a presidential candidate ...."

[He's done nothing. Gingrich was always an excitable megalomaniac--ed Correct answer!] 3:08 P.M.

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Wednesday, September 24, 2008

[I]f you were living in the real world, if you were some hotshot young executive at a Fortune 500 company trying to rise in the ranks, and you pulled some whacked crap like this, it would probably get you blackballed permanently. People would think you were either deeply unreliable or maybe just had a screw loose.

Marshall calls it 'the biggest 'dog ate my homework' in history." I do think there's something to that--McCain's debate-delaying move seems more than a bit immature and self-indulgent. (As a kid, didn't you used to think, 'Gee, if there was a huge disaster I wouldn't have to take that test'?')  ... 11:44 P.M.

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I'd missed George McGovern coming out against "card check."  ... Meanwhile, Eduwonk makes a not-completely-clear argument that "card check" might help school reform--apparently by expanding private sector unions (i.e., SEIU) and diluting the influence of public sector teachers 'unions within the labor movement. There's also some woolly language about how workers in "hard hat" unions are logical allies of reform because "[i]t's their kids ...who are stuck in lousy schools." True, but they're stuck in lousy schools whether their parents are unionized or not--and unionizing them seems more likely to force them to support their brother teachers' locals than it is to force the teachers' unions to give up their demands for seniority hiring, barriers to dismissal, etc. (which are, after all, traditional union demands). It seems easier just to beat "card check" and beat the teachers' unions, with the "hard hat" parents exercising their power as parents. ... I think Eduwonk is being political here--looking desperately and somewhat naively for potential school reform allies in the Democratic party power and money structure. ... 10:30 P.M. link

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Timing Is Everything! ... Second Prize: Dinner! ... Write Your Own Hed!  Tom Daschle invites John Kerry, Richard Holbrooke, and James Carville to breakfast with former Fannie Mae CEO (and ex- Obama-veep-vetter) Jim Johnson. Hard to see how they can pass that one up. .. Premature Comeback Syndrome: Shouldn't Johnson go have breakfast with John Edwards, wherever he is, is until, say, December? ... [Via NewsAlert7:15 P.M. link

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Drama Queen: No convention today! ... OK, it's on! ... The economy's sound... No, wait, it's going to fall apart unless I go to Washington tomorrow! ... We need a commission! ... We need to fire somebody! ... Get me Andrew Cuomo! ... I want ten more  debates! ... But let's postpone the one we've scheduled! ... Do you get the impression a McCain presidency would be a bit exhausting? ...

P.S.: Remember Tom Wolfe's description of a fighter pilot's decision-making protocol: "I've tried A! I've tried B! I've tried C! ..." Update:Delmarva Now's J. Fisher has posted the Wolfe quote in full. It's eerily resonant! ...

P.P.S.: Why does McCain think he is the person who can whip conservative House Republicans into line behind the bailout? Just like he did with "comprehensive  immigration reform." ... But wait, that suggests a possible deal conservative House Republicans might strike: Senator, you say there will be "devastating consequences" to our country if we don't pass this bailout bill. So devastating that you've halted your campaign and want to postpone a crucial debate. Are they so devastating that you're willing to postpone your own controversial immigration reform until, say, after the 2010 elections? ... I think they'll discover there are some things McCain won't sacrifice for his country. ...  5:29 P.M. link

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Item Status Notification (Delay): I was going to write an item making another argument for Obama: That we shouldn't worry about him getting rid of the secret ballot when it comes to recognizing unions because, according to no less an authority than Dem labor expert William GouldObama would need a filibuster-proof 60 vote majority in the Senate to make that change--and a 60 seat majority is out of reach. Planned headline: "Vote Obama: He Won't Get It Done!"

But I can't write the item because a 60 seat Democratic majority is not out of reach, apparently, if Dems can win Senate seats in North Carolina, Mississippi and Minnesota. ... A lot more is riding on Al Franken than I thought possible. It's like a bad Disney movie! ...

P.S.: Gould's fallback proposals for quick secret ballot elections seem like a much more sensible reform than the official Dem plan to completely replace secret ballot elections with the non-secret, individual signing of cards ("card check").  Gould's reforms also don't seem like nearly enough to reverse the decades-long slide in private sector unionization rates, which has a deep, rational basis. (Most obviously: Would you want your industry to look like Detroit's unionized Big Three?) ... 12:16 A.M.

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Tuesday, September 23, 2008

"[T]he charitable reaction was that it was insane."

P.S.: What does McCain's impulse say about his predictabiity when it comes to Supreme Court appointments? Just a thought.** ... Hey, Cuomo's a lawyer! ...

**A thought George Will already had. ...11:40 P.M.

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"Is Obama really that good a speaker?" Daniel Finkelstein's valued overseas perspective:

I find that too often he can be an empty, rather woolly speaker. Someone who likes the sound of his own voice a bit much.

1:47 P.M.

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Did They Blow the Fit? Honda's new Fit is positioned to be the perfect vehicle for the times--tiny, sporty, roomy,  very economical. The 2007 version was all those things (see Seth Stevensons's rave) but also a little ugly. All Honda had to do was correct its few flaws--make it slightly larger, smoother riding and prettier--and they'd have the ideal $4/gallon car. The 2009 version is, according to previews, slightly larger, smoother riding, and prettier. How could they screw up a car by correcting its flaws?

Happens all the time. Making cars slightly larger and more refined seems especially to bring out the Brezhnev in auto engineering bureaucracies. ( See, e.g., VW 412,   Volvo 144S,   Mazda 3.) ... So has Honda screwed up the Fit? Car and Driver's posted a debate on the subject.My reading: Yes, they have. The new Fit has 10 cup holders, but the steering "has lost on-center feel." Nothing is as important as "on-center feel"! And CD's colloquy includes several cues (e.g., "This is a great car for people who are coming from larger vehicles") that experienced readers will recognize as secret distress codes. ... Used Fits are starting to look less ugly already. ... 3:07 A.M. link

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Tight Like That: The New York Times reports on the tighter format of the vice-presidential debate:

At the insistence of the McCain campaign, the Oct. 2 debate between the Republican nominee for vice president, Gov. Sarah Palin, and her Democratic rival, Senator Joseph R. Biden Jr., will have shorter question-and-answer segments than those for the presidential nominees, the advisers said. There will also be much less opportunity for free-wheeling, direct exchanges between the running mates.

McCain advisers said they had been concerned that a loose format could leave Ms. Palin, a relatively inexperienced debater, at a disadvantage and largely on the defensive [E.A.]

But would a looser format really disadvantage Palin in the encounter? 1) She seems like a scrapper who can handle herself in a "free-wheeling" exchange; 2) Biden, on the other hand, isn't someone you want to liberate. Set him free and who knows what he'll say. He's already way too free-wheeling. He needs limits, no? The tighter format will force him to focus; 3) Point #2 is doubly relevant given the difficulties Biden will have facing off against a woman. He's not supposed to condescend. He's not supposed to bully. (He's not supposed to be Biden, in other words.) Set him loose in an open format and it's a near certainty he would get the tone wrong, maybe even get carried away and go all Lazio on her.

Those "McCain advisers" may have just done him a big favor. ... [Tks to D.] 2:03 A.M. link

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Monday, September 22, 2008

We Shall Overarch! Jacob Weisberg says Obama needs an economic "message," by which he means a "simple, lucid theme" or slogan or "overarching narrative" that unites and organizes Obama's his "sensible economic policies." Good point. But, oddly, Weisberg doesn't suggest any slogans himself. Is that because the obvious slogan is not clever or especially electrifying:

PROSPERITY FOR ALL, AGAIN

Or something like that (i.e., "Prosperity for all, for a change."). ... Name a policy this doesn't overarch! ... Meanwhile it addresses the central and legitimate Dem complaint, which is that while the economy has grown quite rapidly, in GDP terms, median income has not. .. The main problem with the slogan: It's depressingly banal. But it's no worse than "Bridge to the 21st Century." ...

P.S.: Economic egalitarians note that if the economy is growing, but the wealth isn't trickling down, that's almost by definition because it's been going increasingly to the top. The slogan implies that. But while it contains this buried "money-egalitarian" grievance, it doesn't imply a redistributive or egalitarian solution. If Obama could goose the economy so everyone was getting richer, nothing in the slogan would be violated if the rich were still getting wildly richer, making the overall income distribution more unequal. ...

P.P.S.: Yes, this slogan fails to incorporate Obama's usual anti-Washington theme. No loss. Palin reduces that theme's bite, anyway. And if any Washington insiders can bring us "shared prosperity," don't we want Obama to make use of them? Most of Obama's economic advisers (Summers, Rubin, Tyson, Sperling, Furman) are Washington veterans. At this point in the economic crisis, that gives voters confidence, which is why Obama recently  had his picture taken with some of them. ... 

P.P.P.S.: I'm not saying Obama's policies actually will achieve "prosperity for all." Card-check unionization certainly won't. But the slogan reflects what they're intended to achieve--it's aspirational. And diagnostic. ...

Backfill: See also William Galston's "message" memo from last week, which also touches on Obama's non-crisp style of communicating. 

**--Or maybe Weisberg has sources, knows the real slogan, and doesn't want to give it away. ...10:44 P.M. link

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Priorities: McCain pledges to present a 'comprehensive immigration reform' plan  to Congress (i.e. including some form of amnesty) "the first day" in office. ..

Update: He's so desperate he's pandering in English! Speaking before "a largely Irish-American crowd,"  McCain focuses on "50,000 Irish men and women who are in this country illegally at this time," promising them a "path to citizenship"

I want to assure you that we will enact comprehensive immigration reform ...

Does the GOP base "get the message" yet? ... Progress! Note pro-Dem blog Think Progress eschewing official bipartisan euphemisms and calling it "amnesty."  ....[Tks. to J.S.] 10:27 A.M.

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McCain wants to fire Chris Cox as head of the Securities and Exchange Commission and appoint ... Andrew Cuomo, under whose leadership the federal  

Department of Housing and Urban Development damaged several New York neighborhoods when it permitted scam artists to bilk the government out of federally secured mortgage and construction loans in the late 1990's.

Seems like just the right man to solve the toxic mortgage crisis. ... P.S.: This wasn't a tiny fraud. It was a quarter-billion dollar scandal that severely disrupted the redevelopment of Harlem, among other places, by gumming up the market. But hey, it was non-profit fraud! ... Apparently, McCain's not just going populist left. He's going irresponsible, opportunist populist left. ... More Cuomo embarrassments here and here ("Mr. Cuomo's complaints that [a primary opponent] was not aggressive in investing state pension money in concerns that would further social causes, like affordable housing.") ... See also Wayne Barrett (alleging that as HUD secretary Cuomo pushed Fannie Mae into the subprime market) ... Note to my conservative friends: Hope Palin's worth it! ... 12:30 A.M. link

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Sunday, September 21, 2008

Now a Ford Maverick would be a cool car for McCain to own. (Rear drive. Famously robust. Old. Ironic.) Alas, it appears to be just a cheap graphic device by Huffington Post. ... Of the 13 vehicles McCain does own, only the 3 electric golf-cart-like things are at all interesting. Even HuffPo likes them. ... The others aren't even ostentatious or obnoxious. Where is a Porsche Cayenne Turbo when you need it? ... . 9:53 P.M.

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Bail Mary! Newt Gingrich makes at least one good point about the Paulson bailout plan:

Implementation of the Paulson plan is going to be a mess. It is going to be a great opportunity for lobbyists and lawyers to make a lot of money. Who are the financial magicians Paulson is going to hire? Are they from Wall Street? If they're from Wall Street, aren't they the very people we are saving? And doesn't that mean that we're using the taxpayers' money to hire people to save their friends with even more taxpayer money? Won't this inevitably lead to crony capitalism? Who is going to do oversight? How much transparency is there going to be? We still haven't seen the report which led to bailing out Fannie Mae and Freddie Mac. It is "secret". Is our $700 billion going to be spent in "secret" too? [E.A.}