Word Play

With everything that’s happening on Wall Street and now Washington, there’s no shortage of words.

Commentary is everywhere. And it’s taking all shapes and forms. Vitriolic diatribes, analytical prescriptions, darkly social satire.

What’s interesting to me however is that despite the volume of commentary, much of its tone and tenor turns on one or two absolutely vital words. To wit, the near ubiquitous use of the word “government bailout,” to describe the plan proposed by Treasury Secretary Henry Paulson.

To me, the senators and congressmen who used the word bailout have done a disservice to their constituents. Using the word bailout, to me, is like swinging a machete. It’s much too simplistic. A bailout does not describe – in any way that informs – the nuances of the predicament that that we find ourselves in. Really, the folks who used, and continue to uses the term bailout, to me, simply want to play the blame game.

And this has hurt us all as Congress has been unable to reach consensus on the right direction. In a way, who could blame them? Even if they understood the necessity of the plan, with their constituents calling in and overwhelmingly denouncing a “bailout”, how do they vote for it?

And from my perspective as a private equity investor, I don’t see anyone on Wall Street getting bailed out. In fact, some of them have been the biggest losers. Hank Greenberg has lost approximately lost $5 billion on his AIG stock this year. Many of the people so closely associated with the current crisis – Stan O’Neal and John Thain of Merrill Lynch, Richard Fuld of Lehman Brothers, James Cayne of Bear Stearns – have lost hundreds of millions. These men lived by the sword and right now they are dying by the sword.

So the word bailout is troubling to me. Because its enabled its users to engage petty rivalries, when in fact access to credit is a national asset. Preserving this asset benefits all of us, in particular the small businesses, mom and pop operations, families who use credit cards, or who buy homes, or cars.

One of the problems with something that always been there your entire life is that you begin to think it’s free and that it exists, well, because it exists. I think the folks who believe we are bailing out Wall Street fall into this camp. The fact is there’s enormous infrastructure behind the credit that we all access and use so frequently. Ensuring that infrastructure survives is not a bailout. It’s just a simple necessity.