This is going to be a fairly short diary, but I wanted to float a simple solution to the bailout angst that everyone here seems to have. I personally think the bailout is quite necessary to prevent to total global financial collapse (which will hurt main street much more than Wall Street in the end) and that the general idea of Paulson's plan is ok (taking the bad debt off the banks books and letting the government hold it to maturity/until its value increases with housing stability). The devil is in the details though.
The details that seem to upset everyone the most are a) that Paulson (and hence Bush controls it b) that there is no oversight/review. I think my solution to these problems may work for everyone (except the Bush administration).
The solution is to appoint Paul Volcker as the man who runs the plan and remove it (the plan) from Presidential control, setting it up as a quasi independent agency (with accompanying oversight). I would however leave some of the court language in the bill, as the worst thing that could happen is an injunction gets enforced that causes the markets to crash again (judges typically do not know crap about economics).
If I were advising our elected officials/presidential candidate, this is what I would propose as a counter:
1)Agree to virtually all the terms in Hank's bailout, save for the lack of oversight.
- Stress the importance of this to national economic security and stress again that no matter who wins, in January we will have a new administration and thus new appointed officials.
- Advocate for a quasi independent agency to handle this bailout plan and that someone like Paul Volcker (preferably Paul Volcker) run the program.
- Attempt to make the entire effort as non-partisan as possible in the interests of the American people.