Government Reshapes Role in Financial Sector With Bailouts

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• RAY SUAREZ:

  The past two weeks have seen some extraordinary and unprecedented moves by the government to deal with that crisis, and there may be more to come.

  For some perspective, we turn to two people who've helped manage the economy in senior government posts. Alan Blinder was vice chairman of the Board of Governors of the Federal Reserve and a member of President Clinton's Council of Economic Advisers. He's now a professor of economics at Princeton University and an adviser to Sen. Barack Obama.

  And Peter Wallison was general counsel of the Treasury Department in the Reagan administration. He's now a fellow at the American Enterprise Institute and an adviser to Sen. John McCain.

  Professor Blinder, let me start with you. What role should political leaders and their appointees play in calming what may turn into a panic?

  ALAN BLINDER, Former Economic Adviser to President Clinton: Well, I think you've got many roles. The first is getting out there, out front, saying something, trying to restore confidence, explaining to people what the government's doing and what, indeed, it might do, and why. The why is pretty important.

  We've had not very much of that from President Bush, as you know. We've had more from Secretary Paulson, but still very much not enough.

  But talk's not enough. The government's going to have to do something. It's been proceeding on sort of an ad hoc basis, one company this, one company that.

  I think people are not really perceiving a pattern there. And I think the time has come to do something major, something that looks like it's going to put up a levee to stop the flood.