On Bended Knee

Surreal:

The day began with an agreement that Washington hoped would end the financial crisis that has gripped the nation. It dissolved into a verbal brawl in the Cabinet Room of the White House, urgent warnings from the president and pleas from a Treasury secretary who knelt before the House speaker and appealed for her support. “If money isn’t loosened up, this sucker could go down,” President Bush declared Thursday as he watched the $700 billion bailout package fall apart before his eyes, according to one person in the room. ... In the Roosevelt Room after the session, the Treasury secretary, Henry M. Paulson Jr., literally bent down on one knee as he pleaded with Nancy Pelosi, the House Speaker, not to “blow it up” by withdrawing her party’s support for the package over what Ms. Pelosi derided as a Republican betrayal. “I didn’t know you were Catholic,” Ms. Pelosi said, a wry reference to Mr. Paulson’s kneeling, according to someone who observed the exchange. She went on: “It’s not me blowing this up, it’s the Republicans.” Mr. Paulson sighed. “I know. I know.”

What I find most remarkable about the past week is the spectacle of a Treasury secretary negotiating on behalf of Wall Street and private foreign banks against the American taxpayer. Could there be a better symbol of the profound institutional failure that defines this administration and the system itself? Yes, in some ways it's business as usual: someone in Washington wants a lot of money, and elected officials push and pull on behalf of their constituents. But if we've entered a period in which Treasury asserts the right to negotiate momentous issues on behalf of interests that aren't necessarily aligned with the public, is it time to think about introducing some independence and accountability by severing that department's ties to the executive branch? Is there a case for letting voters decide who runs Treasury?

One might ask the same question about the Fed. Part of the rationale for an independent Fed is to keep the hands of politicians (and by extension the public) away from the levers of money creation. Nice concept -- except when you get a flawed, congenitally political animal (Greenspan) or a pliant one who for decades helped shape the very system that has failed (Bernanke). The Fed's "independence" has been a running joke for years. So wouldn't it make sense to at least formalize some accountability there as well? Of course there would be inherent risks. But can the grocery and gas-buying public not be trusted to recognize when the Fed's mandate to balance maximum employment and price stability has tipped too far in one direction?

Right now we need sunlight and accountability, not anachronistic, idealistic models that have manifestly failed. Is the ballot box part of the solution?