NYT Lets Treasury Off Too Easy

The Times lets Neel Kashkari, the Treasury’s bailout guy, off the hook in a news story on congressional hearings yesterday.

Congress wants bailout funds to be accompanied by serious disclosure rules and a mandate that banks actually lend the money given to them instead of hoarding it. Kashkari doesn’t:

In response, Mr. Kashkari drew a distinction between the conditions imposed on failing institutions as they were being rescued and strings tied to the money being injected into healthy banks to strengthen the financial system.

The Treasury has been “very aggressive” in dealing with failing institutions like Fannie Mae and the American International Group, he said. It has required the replacement of top management and demanded “the ultimate sacrifice” from shareholders as the price of the bailout.

But he argued that it would be counterproductive to impose similarly drastic conditions on healthy banks that receive money because the goal of those investments is to encourage the private sector to invest alongside the government.

Overly harsh conditions “will discourage private investors from getting in,” he said. “We don’t want to scare them off.”

Wait a minute. Congress is asking to disclose lending here, not fire managers and wipe out shareholders.

The Times shouldn’t have let Kashkari get away with opposing a straw man.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.