The Washington Post ran my op-ed this morning:
If opponents of the $700 billion bailout are truly serious about greater administrative accountability, negotiators gave them plenty of room for
improvement. So much time was spent hammering out the program that the
bureaucratic details have been left mostly to chance.
These details are critical to the ultimate success of any bailout. Time
has a way of eroding good intentions, especially in an environment
characterized by high expectations, intense scrutiny and incessant
lobbying. Treasury secretaries will come and go, but the bailout
bureaucracy will endure. As currently designed, it simply does not have the
independence to withstand the inevitable firestorm of political pressure
that will surround it.
Here are 10 ideas Congress should consider to start building toward a more
Set a timetable for converting the Office of Financial Stability into an
independent agency. The Treasury Department can incubate the office for a
time, but it does not have the institutional memory to manage and oversee
this kind of high-transaction operation. Unless and until Congress breaks
it free, the Office of Financial Stability will be buried under six layers
of political appointees, hardly a harbinger of speed and accountability.
Raise the agency to the same perch as other high-impact government
organizations such as the Social Security Administration and Environmental
Protection Agency. As proposed, the Office of Financial Stability in the
Treasury Department would rank below them.
Give the agency head a seven-year term and allow removal only for cause.
The term of office would create continuity across administrations, while
the removal restriction would provide at least some protection from
political interference. The agency head must be able to say no to risky
investments that Congress or the president might favor. Given recent
efforts to intimidate other inspectors general, Congress might consider
giving the special inspector general proposed under the plan the same
Ensure that the agency's director will be selected solely for expertise.
Lawmakers could do this easily by copying Congress's mechanism for
appointing the U.S. Comptroller General. Under these guidelines, Congress
appoints a selection panel that forwards at least three potential nominees
to the president. If the president does not like the three candidates, he can ask for more.
Limit the number of presidential appointees at the top of the agency.
Fewer appointees will lead to less turnover. Congress could also create
statutory qualification statements for each position to make sure the jobs
are real, not just plums for campaign aides with no place to go.
Amend the Senate's rules to require a confirmation vote within 60
days of receiving a presidential nomination. It could also work with the
next president to streamline the appointments process to eliminate needless
paperwork and delay.
Keep the agency as flat as possible by requiring a rationale for each
management layer. The head of the Office of Financial Stability should be
able to reach the front lines as quickly as possible, rather than playing a
version of the childhood game of "telephone" that diffuses accountability
in so many federal agencies.
Give the agency authority to create a pay system that rewards employees
for measurable performance, not time on the job. Without fast-track
waivers from the antiquated civil service pay system, it is hard to imagine
that the agency would attract the best and brightest to its ranks.
Create a completely transparent contracting process with enough
acquisition officers to run it. The financial crisis cannot become yet
another excuse for fuzzy contracts and opaque reporting. Congress should
require contractors to supply hard data on the salaries they pay their
employees and the performance measures they would use to ensure a fair
return on investment.
Seal the agency off from even the hint of political interference. Congress
could easily prohibit all outside lobbying and gifts while requiring full
financial disclosure from every person in the organization as well as
every analyst under contract.
By adding these kinds of details to the bailout, opponents would give
themselves at least some comfort in voting for passage. They would also
improve the odds that a bailout would succeed. Wall Street would not be
in trouble if it had paid attention to the bureaucratic details. Congress
should not make the same mistake.
These ideas come from my new book, "A Government Ill Executed."