DURING THE PANIC of 1907, the nation’s most powerful banker, J. P. Morgan, brokered a solution to the crisis behind the closed doors of his personal library in New York City. Faced with the total collapse of the financial system, Morgan gathered together the nation’s banking titans into one wing of the library and locked the door, refusing to let them out until they had pledged to help one another through the crisis. Morgan stopped the panic in its tracks, and his modus operandi – hammering out deals in secrecy – has become the conventional method of managing threats to the nation’s economy. This year, the response to the crisis on Wall Street started that way, too. As venerable Lehman Brothers teetered on collapse, the nation’s top bankers gathered in the offices of the Federal Reserve for a closed-door meeting at which the Treasury secretary urged them to rescue the beleaguered firm on their own. When that effort failed, Secretary Henry Paulson demanded Congress cough up three quarters of a trillion dollars to buy up bad assets, submitting next to nothing to make his case. The message was simple enough: Trust us – we know what we’re doing. This time, however, something strange happened. A sprawling network of experts in economics and finance began picking apart the Paulson plan – live, in public, on blogs.

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