I wouldn’t mind Democrats passing an incredibly unpopular bill a few weeks before an election, if the bill solved a big problem.

Unfortunately, the Wall Street bailout Congressional leaders rushed to pass this fall doesn’t seem to have accomplished much, besides hand some Republican incumbents a great campaign issue.

We were told that the Bush administration needed this plan passed immediately, or else credit would dry up and the stock market would go into a tailspin.

But as it turns out, Treasury Secretary Henry Paulson had no idea what to do:

The Bush administration dropped the centerpiece of its $700-billion financial rescue plan Wednesday, reflecting the remarkable extent to which senior government officials have been flying by the seat of their pants in dealing with the deepening economic crisis.

Treasury Secretary Henry M. Paulson said the administration would scrub plans to buy troubled mortgage-backed securities but continue to devote bailout funds to restore liquidity to credit markets.

[…]

“You’ve had a tremendous amount of improvisation here,” said Douglas W. Elmendorf, a former Federal Reserve economist and an informal advisor to Obama’s transition team. “Even smart people get things wrong when they have no models to follow and are acting quickly, so it’s natural that there’d be some reworking.”

Or as Sen. Charles E. Grassley (R-Iowa) put it: “When you see so many changes, you wonder if they really know what they’re doing.”

Paulson, who originally dismissed emergency government investments in financial institutions as a recipe for failure, said most of the first half of the $700 billion had already gone to making emergency investments in banks and other companies aimed at reviving the routine borrowing and lending that are crucial to the economy.

Although Paulson said those actions had helped thaw credit markets and prevent “a broad systemic event” in the global economy, he acknowledged that most financial firms are still deeply reluctant to lend.

So, Paulson has been winging it, doing what he originally opposed, but credit remains very tight.

But no problem, because Congress imposed strict accountability measures in that revised version of the bailout, right?

Not according to the Washington Post: Bailout Lacks Oversight Despite Billions Pledged

In the six weeks since lawmakers approved the Treasury’s massive bailout of financial firms, the government has poured money into the country’s largest banks, recruited smaller banks into the program and repeatedly widened its scope to cover yet other types of businesses, from insurers to consumer lenders.

Along the way, the Bush administration has committed $290 billion of the $700 billion rescue package.

Yet for all this activity, no formal action has been taken to fill the independent oversight posts established by Congress when it approved the bailout to prevent corruption and government waste. Nor has the first monitoring report required by lawmakers been completed, though the initial deadline has passed.

“It’s a mess,” said Eric M. Thorson, the Treasury Department’s inspector general, who has been working to oversee the bailout program until the newly created position of special inspector general is filled. “I don’t think anyone understands right now how we’re going to do proper oversight of this thing.”

To put that $290 billion in context, the U.S. spent about $170 billion on the war in Iraq during all of 2007. Yet the stock market is still swinging wildly and financial institutions are “still deeply reluctant to lend.”

House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid got suckered into backing bad policy that was also bad politics. Barack Obama was eager to go along as well.

Next time leading Democrats want to pass something that expensive, could they at least make it something useful, like universal health care or high-speed rail connecting major cities?