The pundits are telling us that the greatest financial crisis since the Great Depression was caused by subprime lending and the collapse of Fannie Mae and Freddie Mac. If the problem is subprime mortgages, then why are they not being seriously addressed?

Instead, the Treasury and the Federal Reserve are pouring billions of dollars into privately owned institutions such as insurer AIG ($150 billion), among others. The Federal Reserve has refused to even identify the recipients of vast quantities of emergency loans. They say that now is not the time for finger pointing or laying blame.

Yes, it is.

If some financial institutions are indeed “too big to fail,” then why isn’t the government forcing them into Chapter 11 and restructuring them, after picking up their assets at fire-sale prices, replacing their executives and boards, and forcing their shareholders to take a haircut?

Instead of an orderly and controlled unwinding of debt, which will happen anyway, Henry Paulson, the consummate insider, is not only protecting but increasing the fortunes of his cronies who made bad bets at the Wall Street casino. Since Congress gave Paulson the unsupervised license to pick winners and losers among insolvent institutions, this bailout has become a skimming operation for the well-connected.

By threatening us with losing our pensions, IRAs and 401(k)s, the Bush administration rammed this giveaway through Congress. In the waning days of his administration, he is now creating a financial oligarchy with even greater wealth concentration and power. And he is effectively tying the hands of President-elect Obama by saddling him with over $1 trillion in committed debt even before he takes office.

Who’s being played the fool?

JOHN ST. LAWRENCE

Johnston