Back in May, This American Life aired a widely-acclaimed show on the mortgage crisis. In The Giant Pool of Money, Alex Blumberg and Adam Davidson pepper their analysis with dialogue from a cast of characters including:
Richard Campbell, ex-Marine, behind on his mortgage: “At one point, my son had $7,000 in a CD and I had to break it. That really hurt.”
Clarence Nathan, who got a $540K second mortgage while working 3 part time not very steady jobs: “I wouldn’t have loaned me the money. And nobody that I know would have loaned me the money. I know guys who are criminals who wouldn’t loan me that and they break your knee-caps.”
Glen Pizzolorusso, just out of college, making $1 million a year selling mortgages to people like Clarence Nathan: “These people didn’t have a pot to piss in. They can barely make a car payment and we’re giving them a 300, 400 thousand dollar house.”
It’s a powerful show. If you don’t have the time or inclination to listen, you can read the transcript.
Last Friday, Alex Blumberg and Adam Davidson returned with Another Frightening Show About the Economy. There’s no transcript yet, but I just listened while doing housework. It’s just as compelling, and also amazingly prescient. Here’s Adam Davidson from that 10/3 show:
We’ve surveyed a bunch of economists, and most say there’s another approach that’s clearly better. It’s called a stock injection plan. In the Paulson plan, we give 700 billion to the banks and get back these toxic, crappy assets. With the stock injection plan, we still give something like 700 billion dollars to the banks, but in return we get an ownership plan.
From the Planet Money blog, also on 10/3, referring to the TAL show:
That White House plan wasn’t the only plan. It wasn’t even necessarily the plan you think it is. In this podcast, Adam Davidson tells This American Life host Ira Glass about a mysterious phone call in which a tipster suggested that an alternate proposal had crept into the language of the reworked bill. Davidson says that it concerns so-called stock injection, and that economists like it — a lot.
And sure enough, we learned about that alternate plan today. I heard it on the news, and today’s Planet Money is a well-deserved “I told you so”:
That backdoor bailout we’ve been talking about came now front and center. U.S. Treasury Secretary Henry Paulson says the U.S. is prepared to use public money to buy up portions of private banks. Alternately called a stock injection and a capital one, the move would amount to at least a partial nationalization of the financial system.
Why wasn’t this the original plan? Because banks hate it, Davidson says, and they’re a powerful lobby. But, push has come to shove.
The 10/3 TAL show paints a brighter picture of this alternate plan, calling it simpler, fairer, more economically sound, and a better deal for the taxpayer. We’ll see how the market responds tomorrow. But here’s the line that stuck in my head:
Someone, and we still don’t know who, put in very subtle language into the Senate bill that gives this as an option to the Treasury Secretary.
Repeat: “Someone, and we still don’t know who.” Excuse me? The future of our economy depends on subtle language inserted into the bailout bill, we can’t point to who wrote it, or when, and reporters have to receive anonymous tips to learn about it?
I’ve written recently about a Congressional content management system. Micah Sifry makes the same point in an outstanding episode of Phil Windley’s Technometria podcast. The stakes are way too high for these shell games. We need a whole lot more transparency in the legislative as well as financial realms, and we need it now.