Tuesday, August 30, 2011

Hurricane Irene and the Financial Crisis

Ira Stoll

Two disasters, partially of the government's own making. Watching Gov. Chris Christie of New Jersey and Mayor Michael Bloomberg of New York order businesses to close and citizens to evacuate their homes in advance of Tropical Storm Irene reminded me of the actions taken by President George W. Bush, Treasury Secretary Henry Paulson, and the Federal Reserve during the financial crisis. The similarities are striking. In both the financial crisis and Irene, the government actions taken were exceptional and involved depriving people of private property without the due process required under the Fifth Amendment. In the financial crisis, Bush and Paulson seized Fannie Mae and Freddie Mac in what Paulson later described as an ambush.

In both events, unelected technocrats played a big role. In the financial crisis, it was Ben Bernanke and Timothy Geithner, who stayed on after the Bush administration to serve President Obama. In Irene, it was the meteorologists and the director of the Federal Emergency Management Agency, William Craig Fugate, an Obama appointee whose prior job was as director of the Florida Division of Emergency Management under Florida’s Republican governor, Jeb Bush. In both cases, critics of the government’s actions are marginalized in the political and press conversation as a wild-eyed extremist, anarchist, fringe. Yet who were the real destroyers of order here—the skeptics, or those in government who use a predicted emergency to seize property and power, close businesses, or force people from their homes?

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