Taking the Car to Hooverville

• On 10:58 am EST, Tuesday November 4, 2008

First Takeaway: So the Treasury Department won't be writing out any big checks to General Motors. But it is weighing using the $700 billion Tarp program to include a broader array of financial companies, reports Deborah Solomon of the Wall Street Journal.

That means not just banks or insurers, but possibly bond insurers and companies like G.E. Capital and CIT (but not web sites, alas). The Treasury is also considering whether to revise what was originally billed as the central part of the plan, buying troubled mortgage-tied securities through an auction. Instead, it may just buy these assets directly.

Despite the pledges that Treasury Secretary Henry Paulson made to Congress about the rescue plan being transpaper, there is still a great mystery about what Treasury is doing. That Treasury is flying by the seat of its pants, comes across vividly in Mark Landler's article in the New York Times about the department's committee of 5, aided by a staff of 40, who are quickly reshaping the American financial landscape. Landler writes:

"With more than $80 billion left [out of $250 billion] to spend, and hundreds of banks in line for it, the days, nights and weekends of the overworked, sleep-deprived Treasury staff members are a blur of meetings and conference calls, and constant pressure.

" 'This is a four-ring circus,' said Tim Ryan, a former director of the Office of Thrift Supervision, who helped run the savings and loan cleanup in the 1980s and 1990s.

Everyone makes much of October's U.S. car sales, the lowest level in 25 years.

Detroit, of course, has been troubled for a while. Yet the market woes are even hammering strong survivors like Goldman Sachs. Kate Burgess of the Financial Times reports that a Goldman Sachs hedge fund, run by the former heads of Goldman's much lauded proprietary trading desk and launched with much fanfare in January, has managed to lose $989 million in 10 months.

Under the category of closing the barn doors long after the animals have fled, we have opinion pieces today from Steve Schwarzman in the Wall Street Journal about the lessons of the financial crisis and Christopher Cox in the Washington Post about overhauling regulation. Who has less credibility?

Appropriately for Election Day, the Journal has an article about the other vilified president during this campaign, Herbert Hoover.

Some academics are seeking to restore Hoover's reputation, arguing that he was not the blind free-market ideologue that politicians and others have portrayed him as.

"I don't think the U.S. could have leapt straight from Coolidge to the New Deal without Hoover in between," says one historian.