Legal Commentary

Socialism Bush Style: Feds To Take Stakes In US Banks

By Big Tent Democrat

We are all Swedes now:

Having tried without success to unlock frozen credit markets, the Treasury Department is considering taking ownership stakes in many United States banks to try to restore confidence in the financial system, according to government officials. Treasury officials say the just-passed $700 billion bailout bill gives them the authority to inject cash directly into banks that request it. Such a move would quickly strengthen banks’ balance sheets and, officials hope, persuade them to resume lending. In return, the law gives the Treasury the right to take ownership positions in banks, including healthy ones.

All kidding aside, this is a good approach for the Wall Street crisis (though it does not address the homeowner/mortgage crisis that underlies the economic problems). Paul Krugman writes:

A tentative cheer: Paulson may have been dragged kicking and screaming into doing the right thing to rescue the financial system . . . Let’s give thanks to Chris Dodd, who insisted on the provision that makes this possible — and to Gordon Brown, for showing the way.

That's fine but Krugman seems unwilling to look at the homeowner/mortgage crisis, or rather, he seems unwilling to embrace a plan to help homeowners - i.e. HOLC. He has not written against it but seems not to have a written a word about how to address the homeowner crisis.

The problem seems systemic on the progressive side. I frankly am baffled by it. Because dealing with the Wall Street crisis is important, but what about Main Street? That matters just as much or more. The Democrats and their progressive allies are strangely silent on the homeowner crisis. Not bold progressivism if you ask me.

By Big Tent Democrat, speaking for me only

Full post as published by TalkLeft on October 09, 2008 (boomark / email).