Last fall, if you had predicted that by the middle of this year, 10 of the biggest banks would have paid back all $68 billion of their bailout money and begun to raise private capital again, that General Motors and Chrysler would have dramatically restructured and that the stock market would be up 35 percent, I probably would have given you 10-to-1 odds that you were wrong.
Now that it's all come to pass, you might think we'd take a moment and offer a pat on the back to the people who helped to engineer this little miracle — folks like Hank Paulson, Ben Bernanke, Tim Geithner, Neel Kashkari, Sheila Bair, Barney Frank and so forth. There was nothing preordained about this fortuitous outcome. And, given the extraordinary amount of government intervention, we can't give most of the credit to the free market's natural self-correcting process.
Instead of celebrating this feat of economic policy, however, some seem more in the mood for second-guessing.
A House subcommittee last week worked itself into a self-righteous lather over the strong-arm tactics used by then-Treasury Secretary Paulson and Bernanke to persuade Bank of America to go through with its purchase of Merrill Lynch after the bank discovered, long after it should have, that the firm known for being bullish on America had a balance sheet full of manure.
With the crises now averted, committee members were only too willing to summon a full measure of self-righteousness to denounce what they saw as a market-distorting abuse of governmental authority.
You could see echoes of the same indignation after word leaked last week that Bair, chairwoman of the government's bank insurance fund, was demanding that Citigroup shake up its top executive team. In recent years, the geniuses running Citi have come from its investment bank, its trading desk and the "structured finance" department that churned out all of those collateralized debt obligations and credit-default swaps that drove the company to the brink of insolvency. Bair is now demanding that if her agency is to continue guaranteeing Citi's debt, deposits and a good chunk of its trading portfolio, there ought to be at least a few old-fashioned bankers in the mix who can tell a good risk from a bad one.
For sheer hypocrisy, however, you can't beat Republican Sen. Bob Corker of Tennessee. Last November, Corker denounced the Bush administration's proposal for bailing out domestic auto manufacturers, saying it didn't adequately address bloated dealer networks that prevented even the strongest dealerships from making a decent profit.
Fast forward to today, as Chrysler and GM are finally undergoing the radical downsizing and restructuring that Corker had long demanded. And what does Corker have to say about that? He's outraged at the way the discontinued dealers have been treated and wants to ensure that they get at least six months to wind down their operations and receive refunds from the automakers for unsold cars or parts.
Every crisis generates its own set of leaders willing to take risks, twist arms and even bend a few rules to get us through it. Every crisis also generates its own set of political ankle-biters. It's not hard to tell the two apart.