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Why Are the Media More Interested in Blago Than in Unraveling the Bailout Mystery?

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Have you heard what's going on with the government's almost trillion-dollar bailout and how your money is being spent? Do you know all you need to know about who's managing all that taxpayer money -- and how effectively it's being used?

Not if you're getting your news from cable TV. Judging by where the media are focusing their attention, you'd think the Blago/Burris/Reid and Kennedy/Paterson/Cuomo soap operas are the biggest issues facing the nation -- and that little thing about the potential collapse of the world's largest economy is just a sideshow.

Why have the media shown such relatively little interest in the utter lack of transparency about the bailout? Is it because they are still in campaign mode -- addicted to small bore, quick burn-out stories?

The time has come to recalibrate. As Obama transitions to governing mode, so should the press. Admittedly, governing stories aren't usually as sexy as campaign stories -- but the reason we cared so much about the campaign in the first place was to get to the governing.

On top of it, the bailout is a fascinating story. Not so much a whodunit as a who's-doing-it. This mystery is unfolding right in front of us, and the size of the victim pool could very well depend on whether we unravel the mystery in flashback or while it's still in progress.

Like most good mysteries, this one has a huge cast of characters -- like the Dickensianly named Neel Kashkari, the young Goldman banker put in charge of the bailout at the Treasury Department, the sharp-tongued Barney Frank, and the earnest and increasingly bewildered Hank Paulson, who started off the bailout process by romantically getting down on one knee in front of Nancy Pelosi and proposing to make the whole thing official.

But what we know is clearly dwarfed by what we don't know, because at every point in this story, the government has chosen to draw the curtains.

Just last week, four firms -- Goldman, Blackrock, Wellington and PIMCO -- were selected to manage the $500 billion account of mortgage-backed securities for the Fed. But how they were selected, what they're getting paid, and what they plan on doing with the money is all under wraps. "The selection of these managers seems incredibly opaque," Jeffrey Gundlach, an expert in mortgage-backed securities, told TPMmuckraker.

The head of one of the firms, Bill Gross of PIMCO, assured CNBC last month that "PIMCO would be the leader here in suggesting to the Treasury that we would work for no fee." So is Gross holding to his no fee pledge? We don't know - and the government isn't in any rush to tell us.

As a GAO report last month dryly concluded: "The rapid pace of implementation and evolving nature of the program have hampered efforts to put a comprehensive system of internal control in place. Until such a system is fully developed and implemented, there is heightened risk that the interests of the government and taxpayers may not be adequately protected and that the program objectives may not be achieved in an efficient and effective manner." In other words, the money is flying out the door but no one is watching where it's going.

The report also noted that the government still isn't able to say what the banks did with the first infusion of bailout money. In a response letter, Kashkari wouldn't say, but noted that the Fed has a "different perspective" on judging what the banks are doing with the money. And just what is this "perspective"? He wouldn't say. His perspective is that we can't know his perspective.

Of course, a lack of oversight was a key reason why Paulson's original bailout proposal was shot down. So some controls were written into the legislation so it could pass. And then what happened to the controls? Did they evaporate? Did they disappear up David Blaine's sleeve? Were they too toothless to begin with? We don't really know. As Eric Thorson, the Treasury's inspector general said, six weeks after the bill passed, "It's a mess. I don't think anyone understands right now how we're going to do proper oversight of this thing."

If the media don't go after this story with the same passion they went after morsels from the campaign trail, or with the same intensity they are going after every Blago/Burris nugget, and allow the government and its cronies to disperse a huge pot of taxpayer money behind closed doors, we know what's going to happen. And that's because we've seen this same scenario played out before -- in Iraq. In a devastating Rolling Stone piece, Naomi Klein details "the many worrying parallels between the administration's approach to the financial crisis and its approach to the Iraq War." She writes that "under cover of an emergency, Treasury is rapidly turning into an economic Green Zone, overrun with private companies collecting lucrative contracts." If the reconstruction of our economy follows the path of the reconstruction of Iraq, we are in for a very long, very hard -- and very painful -- economic slog.

There is an all-too-real economic drama playing out behind the drawn curtain -- a mystery waiting to be unraveled. And journalistic careers to be made by those doing the unraveling. So what are the media waiting for?