Consumer Law

How About a Little Debate on the Massive Bank Bailout?

By Brian Wolfman

by Brian Wolfman

Remember the last time government policy was made in the interest of the nation with barely a peep of mainstream protest, as the press went along for the ride? Think early 2003. Yesterday, Alan White on these pages warned against Paulson's Breathtaking Power Grab. Meanwhile, Adam Levitin, over at Credit Slips, acknowledges that "Paulson has asked for a $700 billion mortgage slush fund, no strings attached," but says that "[g]iven where we are, this might be about the only thing possible." Nonetheless, Levitin says that there are still "lots of questions" about the plan and asks seven of them here.

And, In today's Washington Post, Sebastian Mallaby tells us why he thinks the President's plan is a A Bad Bank Rescue. Read the whole thing, starting with this introduction:

With truly extraordinary speed, opinion has swung behind the radical idea that the government should commit hundreds of billions in taxpayer money to purchasing dud loans from banks that aren't actually insolvent. As recently as a week ago, no public official had even mentioned this option. Now the Treasury, the Fed and congressional leaders are promising its enactment within days. The scheme has gone from invisibility to inevitability in the blink of an eye. This is extremely dangerous.

How about a little more debate?

UPDATE: N.Y. Times op-ed guy Paul Krugman says "No Deal."

Full post as published by CL&P Blog on September 21, 2008 (boomark / email).