About that Main Street bailout of Wall Street

[GG]

So maybe Paulson's plan wasn't so idiotic to bridge over the short-trem panic?

 

Looks like the final cost of the bailout will be supporting the government entities. Big bad Wall Street will pay everything back, with a tidy profit for the government.

 

So maybe lawmakers will look back at this, and draft laws that address the capital and liquidity concerns of the financial firms, since that's where the failure occurred?

 

Nah.

[John Adams]

I cannot believe all the government plans popping up about how to get mortgages easier to obtain and modify right now. In terms of lessons learned, it seems like we can't even remember yesterday's, let alone lessons from a couple years ago.

[Magox]

So maybe Paulson's plan wasn't so idiotic to bridge over the short-trem panic?

 

Looks like the final cost of the bailout will be supporting the government entities. Big bad Wall Street will pay everything back, with a tidy profit for the government.

 

So maybe lawmakers will look back at this, and draft laws that address the capital and liquidity concerns of the financial firms, since that's where the failure occurred?

 

Nah.

I believe it's possible that you are taking a narrow view on attempting to quantify the "bailouts". The success of the bailouts I don't believe can be fully judged for quite some time. If you want to make the argument that Paulson's plan stemmed the bleeding, you certainly can make that point, although as I have repeatedly argued, there is no doubt in my mind that the massive infusion of liquidity from the Fed's played a significantly larger tangible role.

 

Regardless, rewarding these banks that practiced wreckless economic behavior in my view will continue the "Too big too fail" policies of the past. It is way premature to tout an overall success of the bailout, and I'm a bit surprised that you are chalking this all up to capital concerns. More than capital it was the risks that they were partaking in, and the guarantee of a government backstop that encouraged these decisions. If they knew that there wasn't an implicit guarantee then we would of never have gone through what we just did.

 

So, I think you're off the mark with this one.