So Treasury Secretary Hank Paulson gave a  major policy speech on Monday and the market plummeted.  ‘Nuff said.

I am not one of those who think that George W. Bush should resign the presidency early, to make way for Barack Obama. But I am in favor of the early—make that immediate—exit of Bush’s Treasury Secretary, Hank Paulson.  Alfred E. Neuman would do a better job.

Treasury Secretary Henry Paulson (AP)

And so I am confident that Obama’s pick, Timothy Geithner, couldn’t be any worse.
We’ll soon finds out about Geithner & Co., but in the meantime, we are stuck with a proven failure.

Paulson brings to Washington a lethal combination of stubbornness and indecisiveness.

This headline in Tuesday’s New York Times sums it up: “Bailout Monitor Sees Lack of a Coherent Plan.”

According to the Times’ Diana B. Henriques:

“The head of a new Congressional panel set up to monitor the gigantic federal bailout says the government still does not seem to have a coherent strategy for easing the financial crisis, despite the billions it has already spent in that effort.

Elizabeth Warren, the chairwoman of the oversight panel, said in an interview Monday that the government instead seemed to be lurching from one tactic to the next without clarifying how each step fits into an overall plan. “You can’t just say, ‘Credit isn’t moving through the system,’ ” she said in her first public comments since being named to the panel. “You have to ask why.”

Wow.  That’s not much of an expression of confidence from someone who is supposed to be safeguarding the management of the program.

The December 1 issue of Business Week underscores the urgency of getting rid of Paulson, a man who brings to Washington a lethal combination of stubbornness and indecisiveness. That is, he has been stubborn in his determination to secure bailouts now measured in the trillions, but he has been indecisive, bordering on catatonic, when it comes to actually implementing the bailout.

And so the productive economy suffers, even as the deficit and debt soars. Business Week’s Theo Francis sums it up:

When Treasury Secretary Henry Paulson first pitched the bailout in September, it sounded like a plumbing job. The “troubled assets” on lenders’ books were clogging the financial system, he said, and the government needed to buy up the bad debt to get credit flowing again. But in the six weeks since the $700 billion plan passed, Paulson hasn’t spent a dime on asset purchases, and on Nov. 12 he scrapped the idea altogether.

Now let’s go through this just a bit, keeping in mind that “Hank the Plumber” and his tools can help—or wreck—the U.S. economy. Back in September, Paulson persuaded Bush that the country was facing a fiscal emergency. On September 19, Bush outlined his response, declaring, “The actions I just outlined reflect the considered judgment of Secretary Paulson, Chairman Bernanke, and Chairman Cox.” Which is to say, there’s plenty of blame to go around—plenty of blame, too, for Federal Reserve Chairman Ben Bernanke, and Securities and Exchange Commission Chairman Chris Cox. But the Treasury Secretary is the senior economic official in the federal government, and also the only one of those officials who is directly in the executive branch chain of command. So the bucks—billions and trillions of them—stop with Paulson.

Indeed, back in September, when Bush declared that America faced a “crisis,” the first item on the administration’s emergency agenda, was:

1. The Administration will work with Congress to pass legislation approving the federal government’s purchase of difficult–to-sell assets, such as troubled mortgages, from banks and other financial institutions. This is a decisive step that will address underlying problems in our financial system. It will help take pressure off the balance sheets of banks and other financial institutions, and it will allow them to resume lending and get our financial system moving again.

“Troubled mortgages”—that was the key to the plan. Legislation establishing the “troubled assets relief program” (TARP) was signed into law on October 3. On that day, by the way, the Dow Jones Industrial Average closed at 10, 325.

And now let’s replay that Business Week report on Paulson’s actions since then: “In the six weeks since the $700 billion plan passed, Paulson hasn’t spent a dime on asset purchases, and on Nov. 12 he scrapped the idea altogether.” And now, of course, the Dow is in the mid-8000 range. TARP—the most naked of bailouts to busted-flush gamblers—was never a good idea, but Paulson & Co. twisted arms to get it enacted. Yet nearly two months after getting it passed, Paulson has never used TARP. Paulson has gone on to new ideas, and different kinds of bailouts. And along the way, he squandered not only his financial credibility but also the Bush administration’s.

But wait there’s more: The cover story of that same issue of Business Week is titled: “The Subprime Wolves Are Back: And They’re Feeding Off The Bailout.” Co-authors Chad Terhune and Robert Berner detail:

Thousands of subprime mortgage lenders and brokers—many of them the very sorts of firms that helped create the current financial crisis—are going strong. Their new strategy: taking advantage of a long-standing federal program designed to encourage homeownership by insuring mortgages for buyers of modest means.

You read that correctly. Some of the same people who propelled us toward the housing market calamity are now seeking to profit by exploiting billions in federally insured mortgages. Washington, meanwhile, has vastly expanded the availability of such taxpayer-backed loans as part of the emergency campaign to rescue the country’s swooning economy.

The new loophole is through the Federal Housing Administration (FHA), which is technically a part of the Department of Housing and Urban Development (HUD), a low-profile outfit led by a low-profile Secretary, Steve Preston. HUD has been plagued by scandal for so long that it has little clout around the President’s Cabinet table. Especially on fiscal issues, it’s presumed that the “heavyweights,” such as the Treasury Secretary, will provide leadership and discipline.

But obviously, as the Business Week article details, Paulson, Preston, and all the rest are failing at their jobs. In the scathing words of the magazine, “FHA officials seem oblivious to what’s happening—or incapable of stopping it. They’re giving mortgage firms licenses to dole out 100%-insured loans despite lender records blotted by state sanctions, bankruptcy filings, civil lawsuits, and even criminal convictions.” The piece quotes Gary E. Lacefield, a former federal mortgage investigator who now runs a risk consultancy firm: “Within the next 12 to 18 months, there is going to be FHA-insurance Armageddon.” And that “Armageddon” could cost all of us, Lacefield predicts, another $100 billion.

Paulson would no doubt say that he is overwhelmed by other bailouts (such as the bailout for Citigroup, the corporate home to his onetime colleague at Goldman Sachs, Robert Rubin) to worry about the FHA. Indeed, at a time when federal bailout guarantees—so far—are estimated to top  $8.5 trillion, Paulson probably figures it’s hardly worth getting worked up over another $100 billion or so in losses, especially if the losses come after he is scheduled to leave office in January.

But if that’s the case—and it obviously is the case—then for the sake of Americans as workers and taxpayers, it’s time for Paulson to go. Now. He’s done so much damage that we can’t afford to keep him, even for one more day.