Robert Borosage: This Bailout Is Still A Bad Deal

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from OurFuture.org:



This Bailout Is Still A Bad Deal
By Robert Borosage

October 2nd, 2008 - 9:29am ET




The Senate voted overwhelmingly to pass a bad bailout bill last night. Nothing to kick-start the real economy, except tax breaks for business. No help for homeowners.. No mandate for taxpayers to get shares in the banks that are bailed out. Virtual unchecked discretion for the Treasury Secretary to dispense $700 billion. It’s a good morning to be one of Hank Paulson’s friends on Wall Street.

Faced with an angry revolt of Americans opposed to bailing out the folks who got us in this mess, Congress decided to call in reinforcements—the banking and business lobby. Add in business tax credits, increase FDIC guarantees to appeal to small business and small banks, and call out the contributors.

And, of course, fan hysteria to frighten the public: “We must act to keep the banks working or mortgages will dry up, credit cards will be shut down, small businesses won’t be able to operate.”

There are two major problems with this argument.

First, the need to pass something does not require passing something lousy. Backed by most sensible economists, George Soros called for legislation that would provide sound banks with capital, give taxpayers a preferred equity position and sort out the banks that can be saved from those that should be closed. Paulson’s stated plan of purchasing some of the toxic trash from the banks is likely to be more costly and less effective. ......(more)

The complete piece is at: http://www.ourfuture.org/blog-entry/2008104002/bailout-unacceptable