O'Neill: Bush Doesn't Get Financial Crisis, 'It Shows'

Sept. 25, 2008— -- 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."

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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."

The Bailout Plan

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."