TEXT OF STORY

Scott Jagow: All right, Allan Sloan, you’ve had a few days to digest Paulson’s 200-page plan. It would give the Fed more power and streamline the oversight of Wall Street.
Tell us what you think.

Allan Sloan: Forgive me, but I don’t take the Paulson proposal seriously, and I don’t, I’m not sure how seriously Paulson at the Treasury takes it. There’s no legislation to this. I don’t think this has a prayer of happening.

Jagow: Wow. So this is just a piece of paper with some good will written on it.

Sloan: Yeah.

Jagow: Do you think that the Fed should have more authority?

Sloan: I don’t know. I mean the Fed ought to be able to find out what’s going on at, say, an enormous hedge fund. But, I mean, what are you going to do? Have the Fed, have people sitting on a hedge fund trading desk? I just don’t understand practically how this could work without the Fed taking on some sort of moral obligation to make sure that big institutions aren’t allowed to fail. I mean, and they should be allowed to fail.

Jagow: The public seems to be upset with this bailout of Bear Stearns. But at the same time, they want the Fed to intervene in things like mortgage rates. I mean, I’m trying to weigh this — the reality vs. the perception about the Fed’s authority.

Sloan: If you’ll stand for a little psychobabble, people want to believe there’s some divine power looking after them. And in financial things, there isn’t. Back when Alan Greenspan was around, many people were under the delusion that Uncle Alan, as I used to call him, cared about your 401-K, cared about your stock portfolio. And he didn’t care at all. It’s not his business. He’s concerned about the financial system. And Bernanke, whom I don’t know at all, but seems to be, you know, a very decent, well-intentioned, honest and honorable guy, he doesn’t really care about your stock portfolio either. That’s not his job. The Bear Stearns thing, suddenly the contrast between Bear Stearns and you and me became obvious, and the word bailout was on everybody’s lips. So now everybody wants a bailout. I wouldn’t mind getting a bailout either, Scott. I just don’t know where it’s supposed to come from.

Jagow: All right, Alan Sloan from Fortune magazine, thank you.