I hate to be too reactionary after only reading one source on the subject but this really infuriates me. This is exactly why I did'nt support that damned 700 billion dollar bailout.
http://news.yahoo.com/s/ap/20081006/ap_on_go_co/meltdown_lehman
I don't know if anyone else has heard or read about that fact that there was a second bailout plan option called the "Stock Injection Plan" that apparently was the prefered option amongst most economists and people in the know. My basic knowledge of it is that instead of just giving the 700 billion away and hopeing it works like in the Paulson plan the government AND taxpayers would give the 700 billion but would also be given a small portion of ownership in the bank. Somehow with this plan if it would fail the taxpayer would be that last to loose money. No big surpise the banks lobbied heavily against the plan.
To my knowledge the stock injection plan is in the bill that was passed as an "option" but I'm not holding my breath. I'm still trying to find a decent link that could describe the plan.
http://news.yahoo.com/s/ap/20081006/ap_on_go_co/meltdown_lehman
I don't know if anyone else has heard or read about that fact that there was a second bailout plan option called the "Stock Injection Plan" that apparently was the prefered option amongst most economists and people in the know. My basic knowledge of it is that instead of just giving the 700 billion away and hopeing it works like in the Paulson plan the government AND taxpayers would give the 700 billion but would also be given a small portion of ownership in the bank. Somehow with this plan if it would fail the taxpayer would be that last to loose money. No big surpise the banks lobbied heavily against the plan.
To my knowledge the stock injection plan is in the bill that was passed as an "option" but I'm not holding my breath. I'm still trying to find a decent link that could describe the plan.
In the Paulson plan, the assets being purchased are the bad loans. In other words, the worst of the crap that's out there, and the least likely to be worth anything.
In the alternative plan that seemed to have become the consensus late in the process, was for the $700 billion to be used to buy stock in the failing banks themselves; nationalizing them, at least to a degree.
That way the banks have some capital they can use to continue to issue loans, and the government can fire the dickheads who screwed the company up, and hire a new set of dickheads to screw it up, then sell the shares on the market, and potentially make boatloads of profit for the taxpayers (at the expense of the current shareholders).
Instead, the Bushies want to try to protect the shareholders from their own failures, by buying off the bad investments with taxpayer moolah, so that we absorb all the losses from their bad decisions.
Word is, thanks to the corporate pay restrictions on the bailout, almost no one is opting in. They'd rather see the global economy crumble than lose the opportunity to buy a 3rd private jet.
We're probably going to have another shot at the bailout before long.
Here's hoping we have a President-Elect Obama by then.