What’s the cost of group think?

A trillion dollars

This past week Congress passed a $700 billion dollar “recovery” plan designed to renew confidence in the banking system and among bankers themselves.  Add that to previous bailouts and we’re rapidly approaching a trillion dollars.  My guess is that we’ll exceed that number.

I won’t go into a lengthy diatribe about how we got here.  Placing blame is always an expensive activity - one that slows the progress on fixing the problem.  From the news reports and analysis by various Washington journalists, it seems that the plan to make home ownership possible for a greater number of citizens (a worthy goal) began in the Clinton administration and has been perpetuated through the two Bush administrations.

Unfortunately, everyone thought this was a good idea and no one asked “What will happen if…?  The executive branch didn’t ask, nor did Congress, the Federal Reserve Board, SEC or any number of other regulatory agencies.  There was a complete failure in the system of checks and balances that should have prevented this debacle.

The question is “Will Congress, once again, trust the executive branch and these regulatory bodies to implement this recovery plan well or will they set parameters to protect the American taxpayer?” 

I hope that they will be the first to establish some checks and balances into the system rather than trusting that others will do so.  It’s counter-intuitive, but trusting others to do things we’re not is a prescription for disaster.  If Congress doesn’t want to contend with more emergency actions, it needs to set guidelines for the implementation of the recovery plan.

If there are topics you’d like me to address, send me an email at dale@furtwengler.com.