Paulson Plays Pinata

Before Henry Paulson and Ben Bernanke even had the chance to speak this morning, senators were on the attack.

"The sentiment from Ohioans about this proposal is universally negative," said Sen. Sherrod Brown, D-Ohio. "Why are we bailing out companies whose leaders got rich by gambling with other people's money?"

Sen. Mike Enzi, R-Wyo., pointed out that the bailout had an initial cost of $2,300 for every man, woman and child in the country. Sen. Jim Bunning, R-Ky., said, "The Paulson plan will not fix [these] problems; the Paulson plan will not help struggling homeowners." Bunning continued, saying the bailout out would do nothing but "prop up and clean up the balance sheets of Wall Street. It is a financial socialism and it's un-American."

But does that mean Congress won't pass the Paulson bailout plan? That's harder to say. Despite statements of confidence coming from Congressional leaders and the White House, there's clearly a great level of anxiety among the rank-and-file members of Congress about the White House's plan to buy up flatlining mortgage assets with some $700 billion and backstop a feared collapse of the credit market.

The sheer number of zeros and the paucity of oversight outlined in the initial proposal were bound to attract venom on such a public stage--from both sides of the aisle.

But underlying the senators' shock, dismay and recrimination is recognition of the severity of what's happening, and they almost unanimously recognize the need for action.

Bernanke and Paulson continued to make their case: Credit is freezing, the broader economy is in danger and the worst thing that can be done right now is nothing.

That's why, regardless of what was said publicly this morning, it's seems unlikely that Congress won't pass it, or something akin to it with additional oversight and some kind of additional bailout for homeowners.

That doesn't mean they're happy. Sen. Richard Shelby, R.-Ala., the ranking Republican on the committee, expressed reservations: "We have been given no credible assurances that this plan will work. We could very well send $700 billion, or a trillion, and not resolve this crisis," he said.

For the committee's Democrats, the thought of helping out Wall Street's notoriously well-compensated bankers was unstomachable. "When you assume the risk, you get paid to do that," said Jack Reed, D-R.I. You get paid handsomely when you play with risk, because there's the chance you go belly-up.

Senators were visibly distressed and harried. Sen. Evan Bayh, D-Ind., said he did not recall such a sense of palpable urgency in the Senate since the days after the Sept. 11, 2001, terrorist attacks.

And senators were clearly distressed with the speed with which the proposal is moving. "I am not going to be stampeded into rubber-stamping this proposal," said Bob Menendez, D-N.J., who said due diligence was needed in looking over the proposal.

"I get a sense that it's more of a 'deer in the headlights' mentality," said Bob Corker, R-Tenn. Here comes the car.