Former Treasury Secretary Paul O'Neill said today that our nation's leaders -- especially President Bush -- are "in a panic" and haven't thought through the $700 billion bailout plan in a rush to pass it by the end of the week.
"I don't think he understands or knows much about any of this and it shows," O'Neill said, adding that current Treasury Secretary Henry Paulson "knows a lot of about this, and it's good that he's there."
Sign Up for Our RSS Feed and Get the Latest Business Headlines From ABC News
O'Neill, who served as Bush's first treasury secretary until being fired over diverging views with the president about tax cuts and other issues, didn't have favorable things to say about the economic policies of either presidential candidate, Democrat Barack Obama or Republican John McCain.
"I think most of what has been said by both campaigns about economic stuff is ill-informed and ill-advised," he said. Asked for specific problems, O'Neill said: "Everything."
"Hopefully, whichever one of these two people ends up being president, my prayer is that they will be better than what they have said in the campaign," O'Neill said in an interview with ABC News this afternoon.
"We have spun ourselves into a position where intelligent people don't believe they can tell the people the truth and still get elected, so they pander," he added. "One can only hope that they understand the difference between campaigning and governing, and that their governing will be better than what their campaign said."
O'Neill said that "we do need to do something to avert a complete collapse of the credit system" but added the administration's bailout plan shouldn't be the only option.
"It is possible to re-liquefy the credit system without 'We the People' owning $700 billion worth of homes," he said.
Instead, O'Neill would like for the government to calculate the present value of the mortgage-backed investments and then insure, rather than own, those assets.
Essentially, O'Neill said, we run the risk of become the largest owner of foreclosed properties in the world.
"We have notoriously no capability to do anything like that," he said. "There is no agency of government that could actually do that job."
O'Neill is pegging his hopes on Congressional leaders to investigate that option, because the Bush administration has the "door locked and they haven't taken on any new ideas."
So why is the president and his administration pushing so hard for this plan?
"I think it's because they're in a panic and they haven't thought about it very well," O'Neill said.
The bailout process risks being bogged down by a number of "sideshow issues," O'Neill added, including executive pay and aid for homeowners.
"Not a lot of people are saying, 'Slow down.' They've actually done something a lot worse than say, 'Slow down.' They've introduced a whole bunch of sideshow issues like executive compensation and oversight committees," O'Neill said. "All of that stuff is not relevant to the central problem of re-liquefying these financial instruments."
He said there is "flagrant overcompensation" of CEOs but that is a separate issue that is not relevant to the crisis.