Back when the current disaster was getting started, our 74th Treasury Secretary Hank Paulson had the idea of buying toxic waste from banks. This was his plan to save the world from financial Armageddon and he got Congress to allocate what then sounded like quite a bit of money -- $750 billion -- for something he inelegantly called TARP. Within weeks, Paulson trashed that toxic-waste buying idea because he couldn't price the toxic waste.
Now that Paulson is gone, our 75th Treasury Secretary has an idea to fix the problem: buy toxic waste. Is he aware that the idea did not work for his predecessor? Yes, that's why he's doing it again, but with a twist. He's going to use government money to lend to the very top of the financial hierarchy -- hedge funds and private equity firms -- so they can solve the problem of pricing the toxic waste. And because he'll do this with so-called non-recourse financing, the best the taxpayer can hope for is to get that loan back -- and we'll cover those hedge funds' losses too.