ABC News’ Betsy Stark reports: Did anyone else notice yesterday how many senators were holding their heads in their hands? Maybe it's not surprising that the Treasury Department's request for $700 billion to spend largely as it pleases -- issued with a warning from the Federal Reserve that not granting the request could lead to financial catastrophe -- is enough to give anyone who has to vote on that request a massive headache.
As Montana Senator Jon Tester put it so well at yesterday's hearing: "Why do we have one week to determine $700 billion that has to be appropriated or this country's financial system goes down the pipes?"
The timeline for approving this rescue package does seem absurd, until you remember that in a 24/7 global economy with markets that react emotionally in real-time to rumor as well as fact, the opportunity for considered debate is trumped by the potential for panic-induced devastation. Paulson and Bernanke -- who we are reminded is the nation's pre-eminent student of the causes and consequences of the Great Depression -- seem to be warning us that as scary as it is already, it could get a lot scarier if this $700 billion firewall is not erected.
Which brings us to that number: why $700 billion? Is it really going to cost that much? Is it possible, as some senators were asking yesterday, that it might not be enough? And what is the likelihood, as Chairman Bernanke suggested yesterday, that it will end up costing a lot less?
Keep in mind that what the government is trying to do here is more art than science. They don't really know what it will cost to buy up the bad debt on all those balance sheets but they want to make sure they have enough in their wallet to cover not only the estimated cost but a few ugly surprises. Paulson also argued yesterday that he needs a big number to make a credible statement to global financial markets that the size of the solution is big enough to match the size of the problem. Roughly speaking, the sum of the good money has to be at least equal to the sum of the bad or the markets won't believe in this firewall.
What this $700 billion is not, if it's any comfort to taxpayers, is a check payable immediately from Main Street to Wall Street in the full amount. Paulson and Bernanke call it an investment, not an expenditure, and if it works right, only a portion of that number will actually be spent. If it works right, the legendary investor Warren Buffett said this morning that he thinks taxpayers might even make a profit on this bailout. That may sound a little blue sky in the midst of so many dark clouds but they don't call him the Oracle of Omaha for nothing.