Reply #63: Well, we're not giving it to Wall Street, we're giving it... [View All]

[TreasonousBastard]

to banks, which, once again, are the most effective agents for distributing money.

During the Penn Central bankruptcy, which was then the worst thing ever to have happened since the Depression, the Fed kept the discount window open 24 hours a day to guarantee bank liquidity. Penn Central's bonds were worth nothing after the bankruptcy, but were collateral for incredible amounts of loans (sound familiar?) and the Fed was there to constantly lend money to the banks to cover the asset shortfall.

It worked then, and it could work now. If done right.

BTW, I didn't mention GM in the context of bailing them out-- just the point of how credit crunches have such widespread effects.