The people with the same rapacious mindset that got us to this dangerous place at enormous cost to the nation and at huge profit to themselves are now being asked by Paulson to serve themselves up to another helping. According to Bloomberg, ("Treasury to Hire Asset Management Firms to Jumpstart Rescue," 10/4/08) the Treasury Department is hiring, well you guessed it, 10 asset management companies to become money managers for the program.
Among those pedaling hardest to be selected is the Pacific Investment Management Co. (PIMCO) having their PR flacks organize a lead puff piece on the business page of the New York Times ("Managing the Bailout: He'd Do It For Nothing," 9.25.08) braying "William H. Gross, the manager of the country's largest bond mutual fund has a solution: he is offering to sort through the toxic assets -- for free."
Free??! Well the last time Mr. Gross offered his advice free, at the build up and the height of the crisis with Fannie Mae and Freddie Mac he used his almost unfettered access to the airwaves of CNBC and virtually all the business press to further browbeat and frighten an already reeling public into a mindset to rush into bailing out Fannie and Freddie. Dire scenarios were offered about how their failure would impact just about everything from the spiraling housing market to our standing as an international financial center. While tens of thousands of homes were being foreclosed, evicting families all over America, Gross had access to Paulson himself (please see "Bailout Ballet: New York Times Reports on Hank Paulson/Pimco's Bill Gross Pas de Deux," 10.4.08).
And the result of this free advice? As documented before, a $1.7 billion payday, the largest ever for PIMCO. What Mr. Gross wasn't clear about, and what the somnolent talking heads on the airwaves never quite pressed home was the inherent conflict that PIMCO itself had been buying up Fannie and Freddie obligations on the cheap, and while millions of Americans were bleeding they, being the ultimate insiders, pushed it for all it was worth to a grotesque $1.7 billion bonanza on the back of American taxpayers.
Mr. Paulson, this is the nation's financial future you are dealing with.
Please leave that Wall Street mindset behind. That those who got us here would have another bite of the apple would be unforgivable.