Bush Treasury Dept. Redacts More Bailout Contracts

I was on CNBC this morning discussing the Wall Street bailout, and specifically, the Bush Treasury Department's decision to redact key parts of private contracts that would tell the public how much taxpayer cash various law firms, accounting companies and stock management houses are going to receive as part of this boondoggle. The lack of transparency is stunning, even if it is exactly what many bailout opponents predicted. You can watch the clip here [1], and you can see the redacted documents here [2] and here [3] (and a big hat's off to Bailoutsleuth.com [4] for all its great work).

What was fascinating about this CNBC exchange was the interplay between CNBC anchor Dylan Ratigan [5] and CNBC correspondent Steve Liesman [6] - interplay that suggests even the highest echelons of the media and business community are realizing something is very, very wrong.

Essentially, Liesman delivers the Treasury Department talking points, saying that it's acceptable for the government to hide the amounts that taxpayers will be forced to pay these well-connected execs and fat cats - and that this information will come out at some point in the future anyway. Ratigan, however, vehemently agreed with me that these kinds of redactions are absolutely outrageous, both substantively in terms of how they keep taxpayers in the dark, and psychologically in terms of how the behavior helps intensify the public's already seething anger about the bailout.

Topping it off, former Reagan official William Seidman [7] piles on, making the point that government officials should behave differently than corporate executives, and that Treasury Secretary Hank Paulson is using the redactions to keep heat off himself and from a public that believes he's going to use his authority to give away truckloads of taxpayer cash to his former Wall Street colleagues.

What this suggests to me is that even parts of the Establishment and the business community are waking up to the kleptocracy - and specifically, to how the intersection of kleptocracy and this bailout bill could continue to undermine confidence in the economy.

If part of what is ailing the economy is an understandable lack of psychological confidence in Corporate America and our government, then blacking out huge swaths of government-corporate contracts is not the way to turn that psychological tide - it's a way to exacerbate it, especially since the redactions come after both Congress and the Bush administration promised unprecedented transparency.

Indeed, some of these contracts are with companies like Ernst & Young, which were intimately involved [8] in companies like Lehman Brothers and AIG, which are at the center of the meltdown. Shouldn't taxpayers have a right to see - in real time - how our money is now being spent on those same companies? And shouldn't the Treasury Department know that when it publicizes contracts with redacted sections, it only contributes to the overall sense that our government is acting in bad faith?