'Chronic Disorganization' Cited in Efforts to Fix Crisis

'Chronic Disorganization' Cited in Efforts to Fix Crisis - 4/3/2009 , Class Action News, Class Action, Securities News, shareholder class action, claim, litigation, securities action, common stock'>

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'Chronic Disorganization' Cited in Efforts to Fix Crisis, Political, Legal Obstacles Blocked Action, Ex-Official Says
Binyamin Appelbaum

washingtonpost.com. April 3, 2009
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EXCERPT: A former senior official in the Treasury Department under Henry M. Paulson says the Bush administration's response to the financial crisis was hamstrung by "chronic disorganization," "a broadly haphazard policy process," and "sometimes strained relations" between the Treasury and the White House. The account by Phillip Swagel, Paulson's senior adviser on economic policy, is to be presented at the Brookings Institution this morning. It offers perhaps the most detailed public testimony to date about the last administration's struggles to control the rapid advance of an unexpected crisis. Swagel's retrospective is broadly defensive of the Treasury's role in the response. A former assistant Treasury secretary, he admits that the department failed to communicate clearly with the public and therefore failed to win support for important programs. But he argues that the government's greater failures were the result of political and legal obstacles. The Treasury, in other words, was constrained in responding to the crisis not by lack of insight but by lack of power. Swagel wrote, for example, that the Treasury considered options, including a plan to buy troubled assets from banks, in March 2008 and went through a dozen drafts over the next few months. But he said Treasury officials concluded that Congress would reject such a plan and that support would not be forthcoming until "Secretary Paulson and Chairman Bernanke could go to Congress and attest that the crisis was on the doorstep." Swagel said officials knew that "by then it could well be too late." The record shows that Paulson and Bernanke waited, that Congress said yes, and that it was too late. The account, which dates from 2006, also offers insight into the administration's approach to the crisis, including the heavy and repeated reliance on the Federal Reserve, and the lack of emphasis on developing a plan to limit foreclosures.

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