April 03, 2008
Thursday

The left is jubilant, for the evidence is in hand. Owing to Bear Stearns' near collapse and the Fed's rush to rescue, we now know beyond the possibility of contention that CEOs are skunks, that conservatives would rather help the rich than the poor and that tons more government regulation is the last, best hope for decrepit capitalism.

Such are the arguments now being made in no uncertain terms and with a rather astonishing moral grandiosity. In opinion pieces I've encountered, we are told in so many words that, over here, among enlightened progressives, we have truth and virtue, while over there, among the benighted right, we have falsehood and sleaze.

If these commentators had bothered to look, they would have noticed conservatives' doubts about the Fed risking billions of public dollars by financially backing the Bear Stearns takeover.

Some on the right have been out-and-out opposed, figuring that the firm might have recovered from bankruptcy with no big hurt to anyone, and that, if it didn't, the pain would have served the purpose of keeping ours a dynamic, self-correcting economy that, if overly protected, becomes undisciplined and anemic.

But yes, just as some liberals favored action, so did some on the right. These conservatives feared there could otherwise be dire, widespread and long-lasting consequences affecting not so much the welfare of those directly involved, but the general welfare.

They noted that Bear Stearns investors hardly came out ahead in the deal; in fact they took a bath. Thus, the notion that the Fed and the Treasury Department were responsive as a matter of corporate welfare is uninformed gibberish.

What is equally thoughtless is the notion that aid on behalf of this institution somehow makes the case stronger for aid to individual homeowners facing foreclosure, as if either policy should be evaluated on something other than its own merits.

At least some of the proposals put forward to aid homeowners would reward irresponsibility while doing direct harm to the innocent. Although it somehow escapes the welfare-state mentality, it is historically verifiable that programs meant to lift people from distress have frequently ushered more into distress.

There seems no question that the leaders of Bear Stearns and other related firms took unpardonable chances, but it is an unpardonable prejudice to travel from this particular to a generalization of what an incompetent, lousy lot America's CEOs are.

No matter how much populist resentment there might be of all the money some make, these CEOs have spectacular accomplishments to their credit. Note the failings of some, but note, too, that without these leaders and their organizations, and the other talented, hard-working people in these organizations, this nation would be limping toward destitution.

And by the way, some of the least mentioned culprits in the current predicament aren't business leaders at all, but members of Congress. It has been inadequately discussed just how hard they pushed with their laws and other means to have lending institutions lower standards to extend mortgages to people who could not afford them.

Now some of these same windbags are insisting on immediate passage of fierce regulations as a means of fixing everything once and for all. They just can't seem to get enough of unintended, calamitous consequences.

The better idea comes from Treasury Secretary Henry Paulson, who says we need to rearrange old regulations to better enable us to cope with new situations, but that congressional action ought to await the end of the election year and the passing of the emergency of the moment.

We need prudence, not anxiety-driven rules for a financial industry already beginning to refashion itself. The main thing to watch out for is a Congress that has given us an entitlements mess posing a far worse danger to this country than Bear Stearns, or 100 companies like it, ever could. The conservative caution to beware of big government still holds.

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