Two events this past week provide a strong comparison of how to handle a crisis: the heroic landing of the U.S. Airways jet on the Hudson River, and the release of  more money from the Troubled Asset Relief Program (TARP).  The first is the story of how a crisis is defused  by levelheaded action. The second story demonstrates just the opposite.

First the Hudson River heroics, the pilot,  “Sully” Sullenberger, safely crash-landed the plane into the river, after geese apparently were sucked into the engines.  The 155 passengers and crew were safely evacuated from the plane.

According to a CNN.com story, “An official who heard tape recordings of the radio traffic from Flight 1549 reported the pilot was extraordinarily calm during the event.

“There was no panic, no hysterics,” the official said. “It was professional, it was calm, it was methodical. It was everything you hoped it could be.”

Prior to ditching the jet, the pilot discussed with the air-traffic controller several options, then decided to land in the Hudson River.  After splashing down and evacuating the plane, Captain Sully WALKED the cabin twice to ensure no one remained aboard. Only then did he make his own way to safety.

This crisis was marked by calm deliberation; options weighed, decisions made, and calm, deliberate follow-up by the captain to ensure that everyone was safe and sound.

Contrast that to the release on the same day of $350 billion, representing the second tranche of the bank bailout money by the U.S. Senate.  A Gallup poll conducted January 13 noted, “A majority of Americans (62%) say Congress should block President-elect Obama's request to release the remaining $350 billion in Troubled Asset Relief Program (TARP) funds until more details are provided about how the funds will be spent.”

Lawrence Summers, the director-designate of the National Economic Council, sent a three-page letter to the House and Senate leadership regarding the use of the second $350 billion tranche.  The letter was long on weighty words but short on metrics.  For anyone who has filled out the dozens of pages needed to qualify for a conventional 30-year mortgage, the idea that a few pages of concept could adequately describe how $350 billion is to be spent defies logic.

According to Jon Hilsenrath at the Wall Street Journal, the track record for reporting and transparency about TARP is dismal.  Just last week, the Treasury Department agreed to provide $20 billion to Bank of America, and pledged as much as another $10 billion to limit the bank’s future losses.  This combined $30 billion was funded as part of the first $350 billion installment of TARP.  Except that the first $350 billion had already been committed, but just not used.  Many of us might view this as double counting.  Luckily for the Treasury before the funds were required where they were originally committed, the second tranche was approved.  So the Treasury had already promised $30 billion of the second $350 billion before Congress gave its approval. 

Hilsenrath noted, “The bottom line is that the Treasury is running,” as in sprinting.  Not a good thing to do in a crisis. Continued...