We may indeed NEED $700B from taxpayers. But it should go for FRESH CAPITALIZATION, not "bailout of bets gone bad". If I could choose, I'd have them take more time to be sure (1) we got the "best bang for the buck" and (2) the guilty suffered the most and are NOT bailed out from reckless and greedy bets made. Paulson tried to RUSH this legislation through with the provision that "he be in control.. with no review nor possible overturn of his decisions by either Congress nor a court of law".... That smacks of the same old "Power and Money Grab" to me... I DO NOT TRUST PAULSON!!
I would be much easier to trust if new people not Bernanke or Paulson - who directly created this problem - were in charge Nobody trusts Bernanke and Paulson.
They didn't create this problem since it wouldn't happened overnight, they're just unable to effectively solve this inherited financial problems.
Can fed give that $700b as loan to those troubled banks with illiquid assets as collateral, instead of buying those assets?
Speaking of the so called Credit Crunch, I was at a real estate closing yesterday and spoke with a Mtg. Broker. The lady said she hadn't seen any problems getting a loan, and was writing 97% LTV's all day long. With good credit and proof of income, you can buy a house! Amazing huh?
Please educate me and totally I'm not familiar with how this works. If banks are afraid to lend to each other because they don't know what the other banks have on their books it means the money is out there right? They just don't want to lend it to other *banks* because they don't trust each other right? How would it affect the small businesses from borrowing? If small business A deals with Bank A (with no money) and Bank A couldn't get the money from Bank B (with the money) because Bank B wouldn't trust any banks why can't the small business go directly to Bank B? It is Bank A that Bank B don't trust not the small business isn't it? If the small business is thriving and its book strong why can't it just go to Bank B who has the money and skip the failing Bank A all together? It sounds like a good market cleansing process to me (letting the risky Bank A fail and letting the prudent Bank B get a bigger market share)??? How would Bank A be able to freeze up the lending and why do we need to bail out Bank A to "unclog" anything? It's not like Bank A is the only bank in the world that the small business can work with???