Matthew Rothschild at The Progressive writes about Paulson's conflict of interest: "Is there anyone out there other than Ralph Nader, Dennis Kucinich, and Bernie Sanders who wonders about the conflict of interest that Henry Paulson has been displaying lately?

"It doesn't seem to bother Paulson any.

"You didn't see him recusing himself from decisions that have a direct bearing on Goldman Sachs, the firm he used to run.

"In fact, he just announced the he was going to ladle out $10 billion to Goldman Sachs, along with another $115 billion to six other financial institutions.

"Now maybe it's necessary to stabilize the markets, I don't know. But it sure smacks of favoritism. After all, he let his old competitor Lehman Brothers go down the tubes.

And beyond the appearance of favoritism to Goldman Sachs, there's his indisputable favoritism to Wall Street in general.

"He and us are bailing out Wall Street, and we're barely getting anything in return.

"Though we're buying a financial stake, Paulson is not demanding a change in management, much less a say.

"He's not requiring the banks to halt foreclosures, or to freeze interest rates on subprime mortgages.  (Bold added.)

"And he's not requiring them to stop dealing in the derivatives and credit default swaps that caused the crisis in the first place, even though Senator Charles Schumer of New York urged him on Monday to ensure that the banks engage in "safe and sustainable, rather than exotic, financial activities."  (Bold added.)

"The only thing Paulson insisted on was a limit on executive pay and golden parachutes. This cheap demand, originating from Democrats, played to the understandable resentment the American public has toward the multimillionaires on Wall Street. But trimming their pay hardly gets at anything systemic.

"So the United States ended up trailing Britain in responding forcefully to the crisis, as Paul Krugman has noted.

"But unlike Britain and other European countries, the United States is not gaining a majority stake or even a voice in the management of these financial institutions that we, as taxpayers, are rescuing from ruin.   (Bold added.)

"Meanwhile, the question addressed by Paulson Monday is what to do with that $700 billion? To answer this, he sat down with his friends, the leaders of the largest financial institutions in America that got us into this mess. Namely, Ken Lewis, CEO of Bank of America; Jamie Dimon, CEO of J.P. Morgan Chase; Lloyd Blankfein, Paulson's successor at Goldman Sachs; John Mack, CEO of Morgan Stanley; and Vikram Pandit, CEO of Citigroup.

"These men have shown themselves to be far more interested in preserving themselves than in stabilizing the general economy for American citizens. And it's a safe bet (probably the safest out there) that their philosophy remains intact.

"Economists and media pundits over the weekend optimistically hoped that Paulson might get a clue that his initial idea of purchasing $700 billion of toxic assets would not stabilize the financial system. Having worked on Wall Street, I remain cynical about the notion that purchasing assets was off the table.

"And it turns out that Paulson's Plan B is not to completely abandon plan A. So far, he has decided to spend $250 billion of that $700 billion to buy equity stakes in banks whose future losses are still unknown. The rest could conceivably be used to buy up toxic assets.

"These, and other related decisions are to be made, in large part, by Paulson's former protégé at Goldman Sachs (and now interim assistant treasury secretary) Neel Kashkari. Kashkari described the equity purchase program as "voluntary and designed with attractive terms to encourage participation from healthy institutions."

"But encouraging participation hardly seems an issue. There's not a bank around that wouldn't want its stock price boosted by a Treasury purchase of its bleeding shares. Equally, every bank has a bunch of toxic assets good to go.

"There are equally eager participants running this plan, too. No fewer than seven policy teams and five veteran government officials have been culled to figure out which banks will receive the most help. (This comes as the leaders of the top five cozy up to Paulson.)

"There's also no shortage of firms wanting a piece of the action of the bright new Treasury hedge fund. Seventy financial firms have made bids (i.e., asked for money) to become master custodian of the fund, managing inflow and outflow.

"One hundred firms have bid to become one of the five master program operators that will decide which assets to buy and how to manage them. Let's see if Goldman Sachs makes the cut.

"The outcome of Monday's meeting included no request for more stringent banking regulations going forward. That would require a complete restructuring of the financial landscape into transparent, manageable parts à la the Glass Steagall Act of 1933, which separated commercial banks, investment banks, and insurance companies.  (Underline added.)

"The meeting did not provide a much-needed disclosure of the dangers that still lurk on the books of these firms, in a painfully transparent manner that will illuminate future losses, a move that would help alleviate the uncertainty that has been dragging down the market and freezing corporate and consumer credit alike.

"As Paulson waffles on action and plans, always weighing Wall Street demands first, European leaders are taking more decisive action with their coordinated capital-injection moves. But it remains to be seen whether these will work. Perhaps their actions are an admission of responsibility; British and European institutions also made reckless bets with inadequate capital backing them.

"But they all of the world's central bankers should really consider injecting more transparency and regulation, to restore international confidence, not just money. They must create a global financial structure that will both contain the fallout and avoid a repeat performance--one that never again will be so opaque, over-leveraged and dangerous."

And the warning I issued in the last part of September still holds true, especially about Congress leaving the Paulson foxes loose in the hen house::  "You know how bad this bill it is when that crook, Rudy Giiuliani, is lining up to feed at the taxpayers' on the hook for the bailout trough."