Treasury Secretary Paulson and Federal Reserve Director Bernanke issued only generalized warnings, if dire, in testifying at the Senate Banking Committee hearing Tuesday. One question left unanswered was a big one: ‘What exactly is the harm in not authorizing the smashing sum of $700 billion-plus to bail out some entities in the financial industry?’

(Another big question not answered: Which entities would get the money, or the most, and why?)

The only itemization listed consumer lending -- automobile loans, mortgages, and college education loans -- along with a few references to businesses lending money to each other.

Tabling that second category for now, the argument about consumer lending seems to be that businesses will no longer be found -- absent the $700 billion authorization -- willing to lend Americans money for automobile purchases, mortgages, or college tuition. No car loans; no mortgages; no education loans.

My first response: Huh?

You’re telling me that not even a Hugo Chavez would be willing to help people in the U.S. buy cars, in the interests of sustaining the U.S. automobile, petroleum and highway sectors if nothing else? Says who?

Second response: This, if true, is extortion. If true, also, it has to be industry wide and thus surely violates U.S. Antitrust law. Go, FBI!

(The FBI is launching investigations on Fannie Mae, Freddie Mac, Lehman Brothers, AIG and other companies, and on their top management and executives, for fraud. Let’s hope the FBI moves very, very swiftly. You know there is fire beneath the smoke when the FBI and Daily Kos are on the same page.)

Anyway, this is bogus. Setting aside the crime-fighting also for the moment, it is pathetically obvious that our automobile industry at the very least does not have to be held hostage to Wall Street. While Sen. Charles Schumer (D-N.Y.) joined the chorus about the automobile industry at the hearing Tuesday, there are clearly alternatives to bailing out (unnamed) lenders in the hope of a lateral trickle over to Detroit:

In simplest terms, if the administration is really worried about people not being able to buy cars, then by all means lend the U.S. automakers monies they can use -- to extend car loans to customers themselves -- without going through some middleman entity of the Lehman Brothers ilk. Similar proposals have already been floated by Detroit.

Obviously, lending to giant automakers -- or underwriting loans they extend -- is less than the ideal solution. But lending money to Big Auto has to be better than giving money to Big Bankruptcy.

Same for education loans. If they’re worried about students loans drying up, if the powers that be are genuinely so worried about what might happen to student loans that they can contemplate a proposal like the bailout bill, then by all means lend/underwrite our institutions of higher learning themselves -- either lend to students directly, at a reasonable or modest rate of interest or extend the Pell Grants to save the (financially) bottom half of the college population from graduating in debt; or at the very least extend loans to higher education so that it can lend the money itself -- without, again, going through a middleman like the Lehman brethren. Or some combination of the above. Every state has a department of higher education. The states could help.

Ditto home mortgages. If a dearth of available mortgages really awaits, then, by all means, extend lending or underwriting to or through -- picking a random example here -- Fannie Mae and Freddie Mac. In fact, I thought they were doing that already. After all, these two entities are already under strengthened federal oversight.

Meanwhile, what happened to the old guidelines like ‘Never give in to a blackmailer. Not only is it wrong, it doesn’t work anyway’?