Bailout in scary times

Guest editorials do not necessarily reflect Herald-Leader views.

Under the Citigroup bailout plan, taxpayers assume responsibility for — take a deep breath — $306 billion of the financial giant's bad investments. Infuriatingly, the federal government has no choice. Citigroup really and truly is too big to fail.

It is more than a little unsettling to reflect on how little awareness Treasury Secretary Henry Paulson and his rescue brigade had about Citi's fragility. Weeks ago, they urged Citi to buy bellyflopping Wachovia — and now Paulson and his team are engineering the mother of all rescues for the onetime rescuer. Last week, Paulson said that no more big institutions would fail. This week — er, never mind.

In fairness, though, the deeper we get into this financial storm, the clearer it becomes that screenwriter William Goldman's famous maxim about the movie business is true of those managing this fiscal crisis: "Nobody knows anything." Another Hollywood wise man, economist and actor Ben Stein, wrote over the weekend that this bear is so dangerous that we have to throw everything we have at the thing to stop it.

That's why we're cautiously optimistic about the economic team President-elect Barack Obama unveiled Monday. Timothy Geithner at Treasury, Larry Summers as White House economic adviser and Peter Orszag as budget director — all of these are among the most brilliant economic minds in the country.

The caution comes in because they are all disciples of former Clinton Treasury Secretary Robert Rubin, now at Citigroup, whose deregulating decisions helped create the disaster the new team has to clean up. But there are signs that all three have learned from the mistakes of the past.

In any case, all credit to the president-elect for moving quickly to establish his fiscal generals and to President George W. Bush for working closely with him to ensure a smooth transition. It's like trying to trade out flight crews in an orderly fashion while the plane is nose-diving. Between here and Inauguration Day, it's going to be a white-knuckle ride.

The Dallas Morning News