Coping with a flailing market

This fall, many political observers were surprised to see staunchly conservative Rep. John Campbell not only support but take a leading role in the passage of what was called the “economic bailout” bill.

Later, it came to be known as the Troubled Assets Relief Program (TARP) and politicians referred to it as a “rescue” program to help get enough votes to get it to the president’s desk Oct. 3.

Since then, many have continued to heckle the legislation as the economy sputters. I caught up with Campbell, who is often in demand from the business media because of his economic background, to see what he thinks of the program’s development and the economy’s prospects.

It seems the focus of the Troubled Assets Relief Program approved by Congress in October has shifted a few times. At first the aim was to buy up the toxic mortgages and get those off the books of the troubled banks. Then Treasury Secretary Henry Paulson said it would be best to just capitalize troubled banks to improve liquidity since the main problem remained frozen credit. Is this a sign that the program has just run amok, the equivalent of dropping money from a plane to failing banks? Or does it signal a very fluid market requiring its doctors to maintain aim on a moving target?

The TARP was intentionally made flexible so that the Treasury Department had the ability to respond to rapidly changing market conditions without having to obtain additional congressional authorizations. This is a very fluid situation, which can literally require new strategies in 24 hours, not to mention over a period of weeks or months.

You took some heat from some of your constituents for supporting the bailout legislation, but you felt at the time that it was important because the markets had reached a crisis. Given time to reflect and the results since then, do you have any regrets, and what would you have done differently if you were the Treasury secretary?