Bill McConnell
Bill McConnell - 
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KAI RYSSDAL: Now that all the whoopin' and hollerin' of the conventions is done, John McCain and Barack Obama can get down to some serious campaigning. If they're smart, both of them have started thinking about who they might like to have in their Cabinet should they win in November.

The president of the U.S. Chamber of Commerce weighed in this week. He said he'd love to see whoever the next president is keep Treasury Secretary Henry Paulson around for a while. Clearly, he didn't check with the man himself. Paulson's already said he's done next January 20.

Commentator Bill McConnell has been thinking about life after Paulson. And what the next Treasury Secretary is going to have to deal with.

BILL MCCONNELL: Treasury Secretary Henry Paulson unveiled his "blueprint" for capital markets and regulatory reform in March just as the credit crisis was cresting over Wall Street. In many ways his creation now seems as rickety as the outmoded system he wants to overhaul. The plan has since been overtaken by political reality and his own ad hoc attempts to calm investors.

Part of Paulson's plan included immediate initiatives to deal with the liquidity crunch. Longer-term ideas were aimed at bringing some sense to the overlapping patchwork of federal and state agencies that oversee commercial banks, Wall Street, and insurance companies.

When he unveiled it, Paulson conceded that the most sweeping parts of his plan would take years to implement. But the Treasury secretary will soon leave with the rest of the Bush administration. A new Congress and president will be handed the chore of restoring faith in financial regulation. And many of Paulson's most controversial ideas won't get much traction.

There are sure to be vicious turf wars, and Congress must deal with actions Paulson made on the fly. For instance, which firms can tap federal borrowing and under what circumstances?

There also are issues Paulson hasn't addressed. One is the shaky condition of the country's commercial banks and thrifts. They hold more than $3 trillion in federally insured deposits. Banks need to set aside more capital to cover bad loans. Congress may have to revisit whether that capital comes from new owners like private equity firms or non-financial firms like Wal-Mart.

It may be that Paulson has missed the core problem entirely. Does it really matter whether some banks answer to the Comptroller of the Currency and others to the Office of Thrift Supervision? No, the real problem is that we have become a society living on credit. We have bigger mortgages than we can afford, unfunded Social Security and Medicare obligations, and ballooning trade and budget deficits.

The current economic mess is just another manifestation of America's attempt to delay a financial reckoning with more borrowing. Until Washington truly gets our economic house in order, future meltdowns are certain.

RYSSDAL: Bill McConnell is the Washington bureau chief for "The Deal" -- that's a magazine that covers mergers and investment banking.