However, in practice, the auction design process would encounter serious difficulties. The Treasury had initially selected as a baseline auction a design that “although undoubtedly sub-optimal in the formal mechanism design sense, it was deemed simple, transparent, and robust enough to be implemented rapidly and effectively.” In a crisis, especially important was the speed of deployment, since from the perspective of the “Break the Glass” memo, the Treasury had already lost a week due to the House’s rejection of the first version of TARP. Unfortunately, the market designers responded to the Treasury’s call for assistance by submitting widely incompatible designs for the auctions, necessitating the Treasury to decide between the rival analyses. By itself, the presence of rival proposals was not an insuperable obstacle, but complicating matters was that from the perspective of the Treasury one could not tell on paper what the best auction form was. For example, one dispute broke out over whether to run an “open” or “sealed bid” auction. This had historically been one of the most basic issues that market designers grapple with, and, yet, one proposal called for an “open” auction, yet another for a “closed” auction. Which one was to be preferred was supposed to turn on which mechanism did the best job of aggregating information, but theory provided neither guidance about which form was better, nor guidance about whether either form would bring new bits of useful information into the market.

Philip Mirowski, Never Let a Serious Crisis …, loc. 858