... it is not necessary, even now. There is absolutely no need for the Treasury to have the authority, as you suggested, to "inject capital into solvent banks that are temporarily unable to raise new capital." If a bank truly is solvent, it can raise additional capital or sell itself, if its present owners are realistic about what their bank is worth. The reason solvent banks have a problem raising capital, or selling themselves to a stronger bank, is that they set their price too high, as did AIG.

Amen, brutha! And he continues:

We want to see the bad assets remain in private hands, not in a government warehouse for toxic waste. But why then should anyone support Paulson's proposal to place these toxic assets in the hands of the government? Chairman Frank seems to want to declare the jubilee and engage in mass loan forgiveness in order to ensure his permanent re-election. Maybe we can just all stay home instead of going to work and Barney Frank will just mail everyone a check.

That touches on a pet peive of ours -- it would not be a good development to leave the original Paulson banking bailout plan in place and simply add to it mass consumer loan forgiveness. Two wrongs do not make a right. Any government support for the economy should be not only localized to the "main street" consumer, but should only be delivered after insolvency is manifest. No helicopter drops! (We can dream, can't we?)

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