Former Secretary: Bailout 'Crazy'

While Henry Paulson and Ben Bernanke try to rally the legislature around the proposed $700 billion bailout, dissent has come from politicians, taxpayers, and economists alike, with former U.S. Treasury secretary Paul O’Neill joining the opposition. In an interview with Bloomberg yesterday, O’Neill blasted the plan as “crazy,” claiming that “the consequences of it are unbelievably bad in terms of public intrusion into the private sector.”

The latest iteration of the bailout plan proposes that the U.S. government take control and fiscal responsibility of up to $700 billion in mortgage securities at the taxpayer’s risk. The proposed law, which was shut down by the House of Representatives initially on September 29, has faced steady opposition from legislators on both side of the aisle that consider the proposed bailout hasty, financially hazardous, and unfair to the U.S. taxpayer.

O’Neill, who served under the Bush administration for just two years, has earned a reputation as a vocal and often contentious figure in Washington. His tenure as secretary was marked by frequent dissent directed toward the Bush Administration’s policies, which led to his forced resignation in December 2002.

The former secretary has predictably been highly critical of the White House’s response to the recent credit crisis. In an interview last week with ABC News, O’Neill blasted Bush’s understanding of the financial crisis: “I don’t think he understands or knows much about any of this and it shows.”

A modified version of the bailout bill was approved by the Senate last night and will now go back to the House for a vote. The new version of the bill includes a slew of tax proposals and cuts, pushing the bill's length to more than 400 pages.