Hot Docs: Bush Economic Crisis Team Defends Bailout, Looking Back at the G-20 Summit

Economic Bailout Progress Report: A House committee heard from supporters as well as harsh critics of the economic bailout package yesterday. The House Financial Services Committee held a hearing to examine how the Emergency Economic Stabilization Act of 2008 is being implemented, receiving testimony from Treasury Secretary Henry Paulson, Federal Reserve chief Ben Bernanke, and FDIC Chairman Sheila Bair as well as economists and bank officers. Bair stressed that "the bulk of the U.S. banking industry is healthy" and outlined the steps the Federal Deposit Insurance Corp. is taking to strengthen small banks and to minimize foreclosures. Saying that the package "is about restoring confidence," Paulson anticipated his critics by stressing that it is "not a panacea" but that if it had not passed, "our economic situation would be far worse today." Other watchers were far less positive about the bailout's implementation. Economist Alan Blinder noted with "great dismay" the way in which the Treasury Department has allocated the bailout money to boost banks in what he says is "sharp deviation from congressional intent." Economist Martin Feldstein praises the Fed and the FDIC but concludes that the Troubled Assets Relief Program "has not done anything to resolve the basic problems of the financial sector."

Summing Up the G-20 Summit: The recent summit of the Group of 20 nations considered the "past, present, and future" of the global financial crisis, and Mauricio Cárdenas of the Latin American Initiative at the Brookings Institution sees some potentially positive developments from its work. He finds it significant that blame for ineffective oversight was placed on "some advanced" countries, calling those "the two key words." The G-20's discussions portend a bigger role for the International Monetary Fund, which will be charged with overseeing the participating countries' financial markets and with assisting troubled economies "as lender of last resort." For future negotiations, participants pledged a "greater voice and representation" for developing countries. Cárdenas finds it heartening that the G-20 nations "rejected protectionism" by agreeing to work toward the World Trade Organization's Doha Development Agenda. This, he says, "could be the most significant and tangible result" of the summit.

Nuclear Terrorism Risk 'Very Real': Although some progress has been made in securing nuclear material, a new report warns that the "danger that terrorists could get and use a nuclear bomb remains very real." A study commissioned by the Nuclear Threat Initiative, a group that works to reduce the risk and spread of such weapons, takes note of "dangerously insecure" nuclear materials in countries like Russia and Pakistan and calls for "constant vigilance in countries with nuclear holdings—including the United States." "Securing the Bomb 2008" advises President-elect Barack Obama to make minimizing this threat a high priority as he begins his term, saying that he has "an opportunity to reduce the danger of nuclear terrorism to a fraction of its current level during his first term in office." Among their recommendations: He should spearhead an international campaign to secure nuclear facilities, emphasize a "security culture" to disrupt smuggling, and commit the personnel, information, and resources necessary to formulate a workable plan.

A 'Grim Outlook' for Foreign Investment: Given the pace of the worldwide economic crisis, the Organization for Economic Cooperation and Development sees a "grim outlook" for foreign direct investment into next year. The group's analysis suggests that credit and equity are scarce in the OECD's 30 member countries and that the rate of economic growth is slowing to a crawl, forcing many companies to constrain their investments. The OECD has tracked an increase in investments from developing countries, which it calls a "positive role" for them, likely to "increase over time as both experience and available capital grow." The November issue of OECD Investment News also includes pieces about sovereign wealth funds and about promoting responsible business conduct in China and elsewhere.

''Serious Illness' Impacts 1 in 4 Gulf War Vets: Hundreds of thousands of military veterans suffer from Gulf War illness, a "serious," "multisymptom" condition, as a result of their service. More than a quarter of veterans of the 1990-91 conflict—perhaps as many as 210,000—suffer from the condition, an often debilitating mix of symptoms including "persistent memory and concentration problems, chronic headaches, widespread pain, gastrointestinal problems, and other chronic abnormalities." The Research Advisory Committee on Gulf War Veterans' Illnesses, which makes recommendations to the Department of Veterans Affairs, concludes that the condition is unrelated to post-traumatic stress disorder. Instead, the likely causes are exposure to pesticides and a pill soldiers were given to protect them from nerve agents. There are currently "no effective treatments" for the condition, which leads the committee to call for a "renewed federal research commitment:" "This is a national obligation, made especially urgent by the many years that Gulf War veterans have waited for answers and assistance."