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Posted by: Michael Mandel on September 23
Barry Ritholtz of the Big Picture Blog has 14 questions for Paulson and Bernanke. I’ve excerpted from his list.
Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke are scheduled to testify today before Congress on their massive bailout program.
Here are some questions I would like to hear asked:
1. You two gentlemen have been wrong about the Housing crisis, missed the leverage problem, and understated the derivative issue. Recall the overuse of the word “Contained.” Indeed, you two have been wrong about nearly everything financially related since this crisis began years ago.
Question: Why should we trust your judgment on the largest bailout in American history?
4. In the nationalization of AIG, the US taxpayer received 80% of the company. What is the taxpayer getting for their money in this $700B bailout?
5. You have said that “The Housing correction is the root cause of market stability.” What about leverage — how significant was that as a root cause?
6. Your initial estimates for the cost of this were $700 billion dollars. Yet you also asked for a blank check, an unlimited ability to spend more “as needed.” What is your worst case scenario for the total costs of this bailout?
7. The original version of this bailout package requested no judicial, administrative, or budgetary review of the spending of this bailout, What was the thought process behind that extraordinary, extra-constitutional request?
9. Its just cost the taxpayer $50 billion to bail out money market funds, which are clearly non-insured, risk instruments. Why did we do that?
14. If we make this inordinate grant of unlimited cash, how can we rein in the budget in the future? How can we as a Congress say no to expensive budget items such as Nationalized Health Care, or Infrastructure repair programs or fill in the blank on the grounds they are “too expensive?”
Interesting questions. I’d like to know the answers too.
Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.