Those troublesome financial facts

A deep feeling stirs against a rescue of Wall Street. These are rich guys. They were reckless. They gambled other people's money. To hell with them! It is a moral feeling, simple and clear.

For those who want to respond to facts, the decision is more difficult.

The Dow Industrials plunged 777 points Monday after the rescue package failed in the House. That is a fact, but of sentiment only, like the noise of running feet.

Consider some events, some facts, of the past 15 months. A chasm opened in subprime mortgages. Bank stocks fell in. Bear Stearns, one of the big six investment banks on Wall Street, collapsed. The British government seized the insolvent mortgage lender Northern Rock.

In the past month, events have come fast. The administration of George W. Bush nationalized Fannie Mae and Freddie Mac and effectively nationalized the nation's No. 1 insurance company, AIG. Lehman Brothers failed. Merrill Lynch was gobbled up. Seattle's Washington Mutual, the nation's No. 1 savings bank, suffered a $16 billion bank run, was seized by the FDIC and sold at a distress price to JPMorgan Chase.

In the past five days, the British government seized Bradford & Bingley, a purveyor of don't-ask, don't-tell "liar loan" mortgages, and sold its assets to a bank in Spain. Britain's chancellor of the exchequer said he did this "to protect the banking system as a whole."

The German government rushed to prop up Hypo Real Estate Holdings AG., a multinational property lender that had gotten in trouble in Ireland. A $51-billion rescue package was put together, Hypo said, "in response to the extremely challenging conditions on the international money markets following the Lehman collapse ... ."

The Belgian, Dutch and Luxembourg governments nationalized Fortis, a bank and Belgium's No. 1 private employer, injecting nearly $16 billion to avoid a failure. Belgian, French and Luxembourg governments injected $9 billion into another multinational bank, Dexia.

Iceland's government took a 75-percent stake in Glitnir, the country's No. 3 bank, to prevent a collapse.

The Russian government — imagine a capitalist epidemic spreading to Russia! — pledged $50 billion so Russian banks would not run out of cash.

Meanwhile the U.S. government (the FDIC) offered a loss guarantee under which Citicorp's parent bought Wachovia, the nation's No. 6 bank, at a price that was 2 percent of what Wachovia was worth two years ago. Wachovia had gotten in trouble by buying Golden West Financial, a California mortgage outfit specializing in the same kind of lazy-man mortgages that tanked Washington Mutual.

Those are the events — the main ones. The threat they embody is obvious. Really understanding them, and judging the meaning of a 110-page rescue bill, is not. How many members of Congress knew, really knew, what they were voting on two days ago? At one point, Treasury Secretary Henry Paulson, who probably comes the closest of any federal employee to knowing, got down on one knee to Nancy Pelosi, the House speaker. He was playacting, of course, but with a serious message: Trust me.

You'd think a Harvard professor of economics and former chairman of the President's Council of Economic Advisers would understand both cause and response. But professor Greg Mankiw said on his blog a few days ago. "I know Ben Bernanke well," referring to the Federal Reserve chairman. "If he thinks this is the right thing to do, I would put my qualms aside and follow his advice."

No wonder people reach for the moral indignation. It is easy, definite and satisfying. Facts are not. They are troublesome. Attempting to respond to facts leads you, at some point, to a leap in the dark.

But then, moral indignation starts with a leap in the dark.

Bruce Ramsey's column appears regularly on editorial pages of The Times. His e-mail address is bramsey@seattletimes.com; for a podcast Q&A with the author, go to www.seattletimes.com/edcetera