12/12/08

Spitzer, Thinking!

The former NY governor has a smart piece in Slate today arguing that the inevitable auto bailout will be the first installment of endless billions to come unless we find a way to do this more intelligently. His answer: a competitive bid.

Why don't we tell the current Big Three that $25 billion in capital is available—but only to two of them? The surviving two will be those that submit the best, and final, binding bids, supported by all the necessary constituencies: boards, managers, suppliers, vendors, creditors, and the UAW. The plans that are the best, as judged by a panel of private- and public-sector figures—Jack Welch, Warren Buffet, or Felix Rohatyn, plus Office of Management and Budget and Congressional Budget Office officials—are the plans that will get funded...The company with the least impressive plan will be denied funding. To avoid letting the third parties—creditors, the UAW, or vendors—pick the winner by refusing to sign on with their least favorite of the Big Three, third parties will be required to offer the same deal to each of the three. This process will force the companies to bid against one another for aid, giving us the benefit of genuine competition. This is better than an "oversight board" of Cabinet members who have no real understanding of the industry.

I'm sure there are all sorts of complications with such a notion, but doesn't it immediately seem like a fresher idea than anything we've heard in days of hearings and official bloviating? Which brings us to the tragedy of Spitzer. His personal behavior (and before that his temperament in his rocky first year as governor) has left the huge promise he showed as attorney general unfulfilled. But the man is too talented and energetic to simply vanish; the question is, what plausible road to what feasible public role can he take? Spitzer did another piece recently outlining a way forward in the current crisis in the Washington Post, so it's fair to surmise we're seeing a mini-campaign for resurrection on the strength of his ideas.

That's good as far as it goes, but my wife has long had a better idea on what Spitzer should do to build himself back into a useful contributor: He should become the Ralph Nader of financial products and services. Spitzer could do for mortages, credit cards, insurance products etc what Nader did for cars and other consumer products back in his early days. Goodness knows we need some savvy entity looking out for ordinary consumers and society more broadly as we pick up the pieces of financial capitalism in the decade ahead. It's a perfect fit with the mark Spitzer made policing Wall Street as AG. Done right, Spitzer could build a new nonprofit institution devoted to this mission into an important force in American life.

Eliot, please, listen to my wife.


3 Comments:

Blogger Bill Karwin said...

If one company gets the loan, does that mean the other company just collapses? What about their thousands of workers?

Sounds like an exercise of the Prisoner's Dilemma.

As for Eliot Spitzer's future, it's a good point that no one is simply all bad or all good, no matter how much the media tries to pigeonhole the personalities.

At least we know Spitzer can't be blackmailed.

December 12, 2008 at 6:40 PM  
Blogger Oz said...

You talk of Dead Ideas, using the same hacks that got us into this mess will not get us out.
Sure it’s easy to empty the kidneys on the car folks. We should be crapping on the pinheads that designed and drove the truck that got us into this mess in the first place. Where is all the hate for the Insurance companies that got grants, not loans grants, why did the banks get all the money without scrutiny?

The nearly deadest idea I see is that the current system will save itself. All the banks "over loaned" all the companies that are failing.
The "consultants' who were making the recommendations for the loans were only interested in the hours billed. The Assenter oh my bad Pretty Crummy Way etc should be owned the taxpayer. Their job was to protect the public interest in public stock.

The complete upper education system needs to be held responsible for their actions. After it was the Yale’s, Wharton’s, Harvard’s etc that sired all this evil spawn. Should not the parents be held responsible for their children.
The deadest idea I see is the concept of you coming up with solutions, you are just as much the problem as the rest. The world is full of clever words, I want clever actions.

December 13, 2008 at 8:45 AM  
Blogger Beau said...

Matt, you rock! The second I heard you announce (on LRC)you had a blog, I paused the podcast and went for the laptop. Stoked!

December 15, 2008 at 5:57 PM  

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