This $700bn US bank bailout isn’t about money at all. It’s about organisational behaviour. The approach was just wrong. It may be a good thing, but whatever the reasons for the bailout being rejected, business sense didn’t come into it.
It started badly. Hank Paulson, an ex-investment banker, writes three pages guaranteeing banks $700bn in funding to offload their bad loans, at a time when Americans are starting to feel the pinch. And to grind salt into the wound, to state that it must be ‘beyond legal oversight.’
So in other words: Americans felt, quite rightly, that an investment banker was demanding $5000 from every household in the USA to make sure his friends could keep their jobs… while arrogantly believing his word should trump the rule of law. In short, doing what the Bush administration seems to have done for eight years: believing executive power to be better than checks and balances, and to concentrate decisionmaking in the hands of one or two men.
Is it any wonder Americans rebelled, in a manner worthy of the French? People started calling their elected representatives. Hundreds of times a day. Congressmen and Senators had no choice but to raise questions about the deal. And the deal folded, thanks to the crassness of Paulson and Bush.
But we should celebrate the principle, if not the outcome. This means that American democracy, after a very bad few years of international adventuring, outright lawbreaking, and a timid press, is finally starting to work again. Which means that while America’s economy may hit the skids, America itself – America the idea, the grand principle – will survive, no matter what.