It has become increasingly apparent that some kind of financial bailout will be needed, and soon, to get the nation’s credit markets, indeed the entire global economy, functioning smoothly again. The recent stock market gyrations — Friday’s sharp rally as word of a rescue package surfaced, followed by Monday’s drubbing as it encountered resistance — not to mention the roller coaster response by the dollar and oil, make this clear enough. But crisis or not, Congress can’t simply trust Treasury Secretary Henry Paulson to hand out $700 billion as he and Federal Reserve Chairman Ben Bernanke see fit. That would compound the mistake that created the near-meltdown — a dearth of regulations to rein in an overly greedy financial industry.
Regulation and oversight is needed to ensure that the right people (e.g. overextended homeowners) get help, that the people (e.g. financial executives) who created the crisis don’t end up profiting from the bailout, and that taxpayers get something in return for the enormous risk they’re being asked to assume.
It is almost unbelievable that free marketeers like Paulson, Bernanke and President Bush are suddenly so willing — so anxious — to intervene on behalf of an industry whose problems are so largely of their own making. Presumably that speaks to the seriousness of the problem. And while the need for a fix is unquestionably urgent, it is as much Congress’ responsibility to come up with one as it is the administration whose lack of attention fueled the mess in the first place.