U.S. Eyes Two-Part Bailout for Banks

Posted by Kendall Harmon

The central question facing policy makers: How does the government help banks exorcise their bad bets? For many of these assets, there is no current market price. If the government buys the assets for more than they are ultimately worth, taxpayers will take the hit. If the government pays too little, banks will have to record losses on other similar assets, exacerbating the problem.

Read it all from the front page of today's Wall Street Journal.

Filed under: * Economics, PoliticsEconomyCredit MarketsThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--The Fiscal Stimulus Package of 2009The September 2008 Proposed Henry Paulson 700 Billion Bailout PackagePolitics in GeneralOffice of the PresidentPresident Barack Obama

7 Comments
Posted January 30, 2009 at 6:13 pm [Printer Friendly] [Print w/ comments]



1. Jeffersonian wrote:

It’s deja vu all over again, isn’t it?  How about letting banks who did stupid things with their investors’ money go belly-up?  Would that not be instructive to those that remain?

January 30, 11:22 pm | [comment link]
2. Br. Michael wrote:

They don’t know what to do.  They are desperate enough to try anything and in the resulting confusion billions are going to be skimmed off for pet projects (all, of course, are absolutely necessary and will stimulate the economy(and bring in votes)).  The only thing for certain is that the taxpayer will foot the bill.

January 31, 9:35 am | [comment link]
3. DonGander wrote:

This represents the entire problem of government setting a price on a thing. While government is the primary cause of the problem, it must be the market that sorts it all out.

Of course it WOULD be smart to remove the prime factor in the problem but as no one in government can even admit that they might be just a teeny-tiny bit culpable, we will continue to see weak markets and stupid politics.

And people actually voted for these bozos on perpose. Yet another evidence that the education system has failed this country.

Don

January 31, 9:41 am | [comment link]
4. Br. Michael wrote:

Don a real help wold be for everyone to admit that all (and both) parties have responsibility for this mess.

January 31, 10:32 am | [comment link]
5. DonGander wrote:

4. Br. Michael wrote:

“Don a real help wold be for everyone to admit that all (and both) parties have responsibility for this mess.”

I definitely agree - as much as that is true. But, I remember, and have considerable evidence, that one party tried to get more regulation for Freddie/Fannie and one party effectively resisted regulation. Ii’ll not hold both parties equally responsible.

Don

January 31, 10:56 am | [comment link]
6. Br. Michael wrote:

Don, it goes beyond the last 8 years.  But, if we want to point fingers we can do that until the whole rotten mess crashes down.

January 31, 2:17 pm | [comment link]
7. Sarah1 wrote:

Wait.

I’m so dreadfully confused.

I thought we just went through the “Bank Bailout”—last November and December with lots of hand wringing and swearing that if this didn’t happen we would all be in bread lines by January.

Now we’re “doing it again”?

Has anyone admitted yet that they were dead wrong and the last “Bank Bailout” didn’t work?

January 31, 6:01 pm | [comment link]
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