Feeding frenzy

Tuesday, Oct. 28, 2008 | 2:06 a.m.

Several weeks ago, with panic on Wall Street escalating wildly, the nation’s top financial officials agreed they had no choice but to pitch an emergency rescue plan whose outlines they had only roughly sketched.

On the evening of Thursday, Sept. 18, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke presided at a meeting in the conference room of House Speaker Nancy Pelosi.

As reported by The New York Times, Bernanke announced, “If we don’t do this, we may not have an economy on Monday.”

The reference to “this” was their stark, three-page proposal for the $700 billion federal bailout of private financial institutions, which ballooned to 450 pages in Congress and was signed Oct. 3 by President Bush.

The news then, in the words of the Los Angeles Times, was that the bailout money “grants the Treasury secretary unprecedented authority to buy up to $700 billion of troubled assets from ailing financial institutions in an effort to stave off more bankruptcies and provide cash for new loans to ease the credit market freeze-up.”

The Wall Street Journal reported “the Treasury will have $700 billion to buy up toxic mortgages, securities and related assets that have undermined the nation’s financial architecture.”

A strong impression was created that the Treasury Department and the Federal Reserve would independently prioritize the needs of the economy’s financial sector and spend accordingly.

The news now, however, is that Washington lobbyists are in a feeding frenzy, all competing to present their clients as the most deserving for a substantial cut of the bailout money.

And the lobbyists, according to the Associated Press, are not all representing the securities, investment and banking sectors. A big push is afoot to persuade the Treasury Department to expand the bailout to companies, such as automakers and insurers, never mentioned as the bill was being sold to Congress.

Treasury officials should remember the fear and tension of Sept. 18. They should not cede to lobbyists one iota of control over this money.