Monday, March 23, 2009
Another Day, Another Bailout Plan
Plan doesn't help former residents here
Just when you thought Washington was through tossing away our children's financial futures the Treasury Department has come up with another bailout plan. But this one is being warmly received on Wall Street where stocks were up in early reaction.
The idea is to wipe out bank balance sheets of as much a $1 trillion dollars. They call these bad investments "sour assets." And they are believed to be the reason lending institutions have been holding back on loosening credit.
Of course, this moves forward while some rail against consumers who made bad investments - like mortgages they now can't pay - by saying they took a gamble and lost and must, unfortunately, suffer the consequences. I guess the same rules don't apply for the big banks because, while we can as a nation afford to see our neighbors evicted from their homes, we can't afford to let the banks collapse.
This new bailout is being called the Public-Private Investment Program. The idea is to artificially create a market for bad debt. Those sub-prime mortgages that soured for our neighbors? Well the government will conduct auctions between banks to sell them off to keep the lending institutions solvent.
Apparently all this makes good economic sense. Because it's believed that if the banks get on better footing, so will the economy as a whole.
But that's of little consolation to our neighbors who used to live in the abandoned house up the street.
We talk about issues like this and more weekdays at 5 PM New York time on News Talk Online on Paltalk.com
Photo credit: http://www.flickr.com/photos/iirraa/129603827/