This morning, Treasury Secretary Henry Paulson testified before the Senate Banking Committee on the current financial crisis. Nearly every senator on the panel criticized the $700 billion bailout plan Paulson proposed this weekend, with many calling for stronger oversight.
In his opening statement, Paulson struck a defensive tone, blaming Congress for misunderstanding him in thinking he didn’t want robust oversight. He just didn’t want to be “presumptuous,” he explained:
We gave you a simple, three-page legislative outline and I thought it would have been presumptuous for us on that outline to come up with an oversight mechanism. That’s the role of Congress, that’s something we’re going to work on together. So if any of you felt that I didn’t believe that we needed oversight: I believe we need oversight. We need oversight.
Paulson is rewriting history. Far from avoiding “presumption,” Paulson’s plan released last weekend explicitly denied any review at all of his actions:
Section 8. Review: Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
It can hardly be the fault of Congress for taking Paulson’s written plan at its word. In fact, one might say it would have been “presumptuous” to assume Paulson actually meant the opposite of what he had written.
Later in the hearing, Sen. Tom Carper (D-DE) asked the panelists whether they would support the creation of a new Inspector General post to oversee the program. All of them — the director of the Federal Housing Finance Agency, the chairman of the federal reserve, the chairman of the Securities and Exchange Commission, and Paulson — supported the move, though Paulson said he didn’t think they could “design it here today.”
,Sen. Chris Dodd (D-CT) finally asked Paulson about Section 8, which Dodd called “so sweeping that it would be troubling to me.” He told Paulson, “There will be real problems with this kind of language. … This language in my view cannot last here.”