10/31/2008 05:12 am ET Updated May 25, 2011

Marketing for Grownups: Selling the Rescue Plan

For years, we've marveled at the marketing and branding skills of the Bush White House. From "The Patriot Act" to "No Child Left Behind", these guys came up with great names for some toxic stuff. That is why I'm so surprised at how they've bungled the sale of Secretary Paulson's plan, or the "Wall Street Bailout Plan" as it's called every moment on television.

First, they've done a terrible job explaining the problem in a way that means much to average people. While people keep hearing about the freezing of the credit markets, even today, borrowers up to their eyeballs in debt are getting mailers from their banks with blank checks promising them 3.9% interest if they just consolidate their credit card debt with their banks. (Of course, if they are a day late on a monthly payment, the rate pops up to 20%) So it's hard for regular people to see the "credit crunch" as an immediate need to act. It seems to them to be an immediate need to enrich those who are already rich, or in other words, a "Wall Street Bailout."

This Tuesday morning was the first time I heard someone put this crisis in a way that made sense to regular people. Regular people have union pensions or other pension funds. Regular people have 401(K)s. Finally, someone put this is in perspective. The clarity came, surprisingly, from President Bush. He began by saying something to the effect of "let's put this problem in perspective". Perspective has been badly missing from our discussions. Then, he said something that had been obvious for days.

Bush noted that the effect of just Monday's drop in the market capitalization of the stock market was in excess of $1 trillion -- that's right, more than the $700 billion "bailout." If we "let this sucker go down" as someone would say in the Texas vernacular, we will certainly punish some of those billionaires who caused the problem. But we will also punish ourselves, those of us who hold 401(k) accounts, or are counting on pensions to retire, or counting on university endowment funds to provide scholarships for our kids. If we're bailing out anyone, it's us.

Next, by branding it a "bailout", they've accepted "defeat", as John McCain would say. It's only a "bailout" if the Treasury Secretary is allowed to buy assets at a price that is above market. The problem right now is that we don't know what "market" is. In fact, the changes in oversight insisted on by Barack Obama and the Democrats have provided some protection here.

Effectively, we've told Secretary Paulson this: "We're not giving you a blank check. We're not going to allow you to buy this stuff from your friends for stupid prices, like we overpaid Halliburton in Iraq. We're going to watch you, and if you try to reward the crooks, we'll stop you. And we're not giving you all the money at once. So, if your plan isn't working, we'll stop you". As I see it, the changes the Democrats have brought to the table, if implemented, allow the plan to go forward in its most important way, to psychologically calm the markets, while at the same time allowing us to be flexible when the new President takes office in January. The new President can change the plan, or pull the plug on the plan, and he can lead Congress to institute the long term regulatory changes that, finally, most people agree are necessary.

Finally, the proponents of the plan have allowed it to be branded a "bailout" and not an opportunity. By not overpaying for these assets, the "bailout" might actually be an opportunity for smart investment. This is another lost marketing opportunity. Like post-Depression programs and the RTC, there is a chance we taxpayers might "buy low and sell high." Here in Miami, a number of developers like Jorge Perez, who have the wherewithal to be patient, have banded together with financiers to create what are sometimes called "vulture funds". These funds buy up condo units (sometimes in their own projects) at low prices to hold and rent until the market ticks back up. Most people think these funds are a good idea for people with money and patience. The Federal Government has money and patience. To me, it's just a question of whether the Feds avoid overpaying for these assets. If they can avoid overpayment, this could be a win/win. Erin Burnett reported yesterday that if 60% of the borrowers of this toxic paper keep paying their mortgages, the government goes into the black. Right now, she says, 90% are paying their mortgages. If she's correct on these figures, this plan might work. If we keep some confidence in the markets, real people making real mortgage payments keep their jobs. The punitive parts of their mortgages can be rewritten. Those who simply speculated get wiped out, and the government still controls the underlying asset.

So, let's market this thing properly. If we're "bailing out" anyone, it's ourselves -- our 401(k)s, our pension funds, our college endowment scholarship funds. And if done right, as government actually has in the past on similar programs (you can look it up! Chrysler! The RTC!), maybe we can turn toxic lemons into lemonade.

There has been one last bit of sunshine to come from all of this: the last ten days have shone a bright light on our presidential candidates. One has been feckless, mean-spirited, uneven and untethered. One has been a steady hand on the till. He took the Secretary's proposal, actually read it, consulted with his party leaders, and quietly worked with them to offer up changes to the proposal that would guard against a true "bailout" for the undeserving, and would help protect borrowers and taxpayers. The grownups gathered around the compromise. It's time for the others to grow up.