Frank Rich writes that an inability to manage populist anger could undermine everything Barack Obama hopes to accomplish. I agree. But in the process, he writes some stupid stuff that’s likely to encourage more populist anger. To wit:
Bob Schieffer of CBS asked Summers the simple question that has haunted the American public since the bailouts began last fall: “Do you know, Dr. Summers, what the banks have done with all of this money that has been funneled to them through these bailouts?” What followed was a monologue of evasion that, translated into English, amounted to: Not really, but you little folk needn’t worry about it.
Yet even as Summers spoke, A.I.G. was belatedly confirming what he would not. It has, in essence, been laundering its $170 billion in taxpayers’ money by paying off its reckless partners in gambling and greed, from Goldman Sachs and Citigroup on Wall Street to Société Générale and Deutsche Bank abroad.
Rich apparently doesn’t understand that this was the entire point of bailing out AIG in the first place. The thought was that if AIG failed to fulfill its contracts with its counterparties, the entire financial system would probably collapse. So we bought the company and gave them a bunch of money so that they didn’t default on their obligations. That money was never for AIG, it was for paying off AIG’s claims.
I agree with Rich’s larger point, though. It’s up the government to explain in as much detail as possible what it’s doing, who benefits, and why it’s going to work. The fact that a New York Times columnist doesn’t know what the AIG bailout was fundamentally about illustrates that they’re failing at that.