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Paulson Plan Guarantees Nothing

You know those hundreds-of-billions we just gave to rich Wall Street bankers?  The money that Main Street banks didn't want or or need?  Well, it didn't actually buy us anything: "The truth of the matter is, they can't put a gun to their head and say you have to lend this money," said Charles Horn, a former official at the Office of the Comptroller of the Currency, part of the Treasury Department, and now a partner at the Mayer Brown law firm in Washington. Treasury officials acknowledge they can't force banks to get the taxpayer money into the hands of their customers. Instead, officials are betting that the government's investment will create conditions where banks have a greater incentive to earn profits from lending than to hoard money to shore up their balance sheets...continue to full post

Full post as published by Crime & Federalism on October 15, 2008 (boomark / email).