WASHINGTON — It was a room full of people who rarely hold their tongues. But as the Fed chairman, Ben S. Bernanke, laid out the potentially devastating ramifications of the financial crisis before congressional leaders on Thursday night, there was a stunned silence at first.
Mr. Bernanke and Treasury Secretary Henry M. Paulson Jr. had made an urgent and unusual evening visit to Capitol Hill, and they were gathered around a conference table in the offices of House Speaker Nancy Pelosi.
“When you listened to him describe it you gulped," said Senator Charles E. Schumer, Democrat of New York.
As Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Banking, Housing and Urban Affairs Committee, put it Friday morning on the ABC program “Good Morning America,” the congressional leaders were told “that we’re literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally.”[1]
Wow. And after that, “How did we get here?” If you can get by the instinct to question motives, political and otherwise, this describes a situation that would be about as bad as it could get. The fact that both Republicans and Democrats can agree on its severity probably dispenses with the question of motive, but I guess we will all wonder whom we were really bailing out.
But, again, how did this happen? We wrote a piece a few months ago about the sub-prime mortgage debacle that we thought was moderately humorous. “Who Are the Brains Behind the Housing Crisis”[2] Basically, we were asking how all of this Ivy League brainpower on wall street could screw something up so badly.
But this isn't funny...
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