Well, it’s back to the drawing board.
As far as I am concerned the $700 million is not the issue. No one has tried to expain where that number comes from, or has tried to justify it. Also, whatever amount is eventually used, much of it will come back to the treasury in a number of years.
What gets me is the apparent assumption that the top level executives are entitled to maintain their income. As I’ve stated earlier, in a normal business situation these guys would be out the door. Perhaps Paulson picked the $700 billion number to be large enough so that the executive salaries and bonuses would not be noticed. Oops.
It is clear that many people are going to lose their homes. That’s a pity, but those people took out mortgages they could not possibly afford. They took a gamble on home pricing and lost.
The only critical need I see is that businesses need credit to finance their operations. It’s necessary to save the jobs those businesses provide. Maybe there is a way to accomplish this without saving the institutions that behaved so badly. Maybe it means nationalizing the short term credit industry, or develop some kind of restructuring. Could it be done on a temporary basis? Judging from history, nothing given to the Feds is temporary. Maybe it would be possible this time. The advantage is that the money would flow only as needed to unfreeze the credit market.