September 22nd, 2008
03:04 PM ET


[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2008/images/09/22/art.financialmeltdown.sign.jpg caption="A 'Meeting In Progress' sign hangs on the door of the Senate Appropriations Committee Sunday on Capitol Hill in Washington."]Joe Klein
AC360° Contributor
TIME Columnist

There seems to be a rare harmonic convergence on the op-ed page of the New York Times today, both Paul Krugman and William Kristol–the alpha and omega of the Times' columnist corps–are opposed to the Bush Administration gargantuan Wall Street bailout.

Krugman obviously knows a lot more about economics than Kristol. Indeed, Krugman has written early and often about the disastrous potential of the housing bubble. And I would trust him here–the taxpayers' stake in this bailout is best protected by the government taking an equity stake in the affected firms:

And if the government is going to provide capital to financial firms, it should get what people who provide capital are entitled to — a share in ownership, so that all the gains if the rescue plan works don’t go to the people who made the mess in the first place.

That’s what happened in the savings and loan crisis: the feds took over ownership of the bad banks, not just their bad assets. It’s also what happened with Fannie and Freddie. (And by the way, that rescue has done what it was supposed to. Mortgage interest rates have come down sharply since the federal takeover.)

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Filed under: Barack Obama • Economy • Raw Politics
soundoff (21 Responses)
  1. Pete S, Merrimack NH

    Who will be the first to say that the thousands of americans who signed up for mortgages that THEY knew they would have trouble paying back is as much to blame as those that sold them. Were they all that susceptable to being forced into a bad decision. I think "not".

    Let the mortgages fail. Let the corporate world and the homeowner pay for their bad decisions. Home owners will become renters. The houses will not stay empty for long. Prices will adjust. First time buyers like my son will move in with mortgage payments they can manage.

    September 23, 2008 at 8:59 am |
  2. Gene Penszynski from Vermont

    Lets face it folks this situation is the result of decades fo DE-Regulation. The G W Bush Neo-Con posdition up until a few days ago was 'let the markets take care of themselves'. All this 'Hooverian Philosoiphy' has done is exacerbate this situation to the point where it has reached the point it is at now. To Bush's credit he has finally admitted (without saying so of course) that the concept of the 'UN-Reuglated free market ' is a completet failure' by at least supporting massive government intervention.

    The age of the neo-con fiscal greed mongering whats in it for me and screw you conservative is nearing it's end. Thank God ! It's time that RESONSIBLE CAPITALISM is at last replacing this Anti-American philosophy.

    Maybe its time for all those irresponsible G W Bush neo-con fiscal conservatives to relocate to COMMUNIST CHINA where they can do us all a favor by screwing up that economy !

    September 23, 2008 at 8:12 am |
  3. Judy Arnold

    Just wondering,if McCain puts" country first" why did he pick Calin as VP? Being a white 63 year old, disableled ,EX Republican i feel as though the McCain/Palin ticket will be a disaster.....As we saw McCain saying he would "fire Cox" were the first things out of his mouth. I can say between the two there is little difference. Both are "hot " tempered and STUBBORN.i THINK the press has been giving him a free ride that has helped him. With all his mistakes he has made from the get go I wonder if anyone else thinks he has a mental problem?The biggest thing the two of them have in common is the gift of lying...How can we trust anything they say. O'Bama was blasted on everything. Why can't Calin give any press conferences? She's lied about everything so i am sure she could stumble through this.
    McCain making the first major decision showed me just how he puts country 1st. What a joke...Even when called out on their un truths they still tell them over and over and over. I think him being a POW does not qualify him to hold any office..He has shown NO honor, no love for this country I'm ashamed of his actions. LIAR,LIAR.......

    September 23, 2008 at 2:49 am |
  4. frank whittle

    when a country is at war doesnt the war powers act prohibit actions that undermine the goverment,and the peaple of the nation,are not the culprits responsible for any such acts as treason and be delt with accordingly

    September 22, 2008 at 11:41 pm |
  5. t

    The Federal Reserve (a corporation, not a branch of our government) and the Bush administration have successfully managed to wipe out our banking institutions along with peoples retirements, NICE JOB!

    So what do we do now? Let's start by saying NO to what ever lame idea the thieves try to put before you.Based on their track record it's probably NOT a good idea

    September 22, 2008 at 11:35 pm |
  6. Rob Henry

    Anderson, NO DEAL on the bail out. Are you telling me that in ONE week the Treasury Secretary goes from saying, "we have a fundamentally sound economy" to man the life boats? What is wrong with this picture. NO way, No how, I am not buying. Lets take a time out and see who is lying to who. I resent being herded to the "ATM" to handover 700 billion to one Trillion dollars to one person. He is not even an elected official. Are you kidding me! Enough,... enough of bait and switch politics. Is it any wonder we find ourselves running on empty.

    September 22, 2008 at 9:26 pm |
  7. Kathy, Chicago

    I agree, David in Fla. It also seems like a lot of money and very few details about what is going on.

    September 22, 2008 at 9:18 pm |
  8. James in Kennesaw, GA

    After reading Secretary Paulsen's request and the bill Senator Dodd has proposed in response to this request, I am freighten by three things:
    1. The lack of statistical data supporting the 700 billion dollar appropriation;
    2. The absence of information on the likelihood of success or a definition of success;
    3. The level of unregulated authority Secretary Paulsen will have to determine what assets will be acquired and the terms of acquisition. Is it really possible to spend this money with so little information and so few details?

    September 22, 2008 at 8:47 pm |
  9. Peter John

    What if instead of just directly bailing out the financial institutions the same money went directly toward catching up predatory debts with those causing least problems first, and requiring an increase of 100 pints in all credit ratings for people who have had no problems.

    I guess that would be socialism, though, wouldn't it? I do think it's unfair that if taxpayer money is going to bail out all of these firms we as taxpayers don't get some credit with those firms for it.

    Of course, if Sen. Obama's tax plan ever becomes law, it will mostly be those who've made the most money from the crisis paying the costs of it, at least for a the first few years.

    September 22, 2008 at 8:41 pm |
  10. David Besley

    Where is the President? Why is he not addressing the nation at this critical time explaining in detail why the $700 Billion is necessary and what specifically will happen if the money is not realized. I feel like the government is holding a gun to me and demanding my money. Where is the President??

    September 22, 2008 at 8:18 pm |
  11. Julie

    Why would we continue following a leader that led us into war on false information? I don't trust anything this administration has to say. They want this bail out pushed and rushed through before its too late hmmmmm sounds a bit familiar

    September 22, 2008 at 8:14 pm |
  12. Larry L.


    I really lie the way you think,I would like to nominate KIM for president.

    September 22, 2008 at 8:13 pm |
  13. Angela

    Paulson just said less than two weeks ago that the fundamentals are strong. What changed last week- seems like there is more here but no one will say. Also, no tax payer seems to support this so is anyone listening- why are all in Congress just failing right in line. Do we really need this and why- what changed last week?

    Fyi for Congress- those of us tax payers that live in the real world have known there was a problem a long time ago- this is not new for us- what's new is us tax payers having to borrow 700 BILLION DOLLARS to give to baill out the fat cats on Wall Street!!

    September 22, 2008 at 7:20 pm |
  14. Bridget

    Effectively, Henry Paulson went on national television this weekend and, with a straight face, said Congress simply must fork over $700billion with no strings attached. Specifically, he would be in charge of all decision-making regarding this fund and his actions would be "non-reviewable". Sounds like an investment banker not a steward of the public. Wasn't he running Goldman Sachs when they began buying all those toxic mortgage-backed assets, and now he expects us to just give him a blank check? We need an equity stake in these purchases with numerous protective provisions for the public and an independent oversight of this whole operation.

    September 22, 2008 at 4:25 pm |
  15. Kent Fitzsimmons,Kewanee, IL

    All of this could only result in an election year. if anyone would oppose this...........they are branded as not caring about us regular folk.........Well, they really don't..............WallStreet? Lol........I could care a less. Spiral down the toilet like the rest of us.................

    September 22, 2008 at 4:18 pm |
  16. David W, Florida

    This is really pissing me off. This is an administration that speaks keeping government small and letting business run without intervention. Where the hell is that rhetoric now!

    Unfortunately the real losers in this $700B bailout are the folks who lived within their means and had nothing to do with the mess we are in.

    To those who knowing overextended and for the execs on wall street that got paid big by preying on the overextended: Thanks for screwing the rest of us.

    September 22, 2008 at 4:12 pm |
  17. Jason

    You can't really blame the bank, they're just following the lead of the government. We keep saying the tax payers are going to shoulder the cost, but the federal government is already operating in the red. We'll bail the banks out with money the government doesn't have, thereby weakening the dollar some more, so we can pay more for all of our goods that are manufactured in China.

    September 22, 2008 at 4:11 pm |
  18. JC- Los Angeles

    I truly believe that the ethical hard working Americans deserve to see our executives and politicians thrown in jail for their contributions to creating one big post-9/11 American fraud factory .

    The cesspool that our nation has become is unacceptable; for years Guantanamo Bay has housed prisoners who may or may not have committed crimes against America.

    If we can confine them, why can't we find a new and less hospitable residence for Alan Greenspan, Countrywide's Angelo Mozillo, Merrill Lynch's Stan O'Neil, WAMU's Killinger, Bear Stearns' Cayne and AIG's Sullivan and Willumstad and endless others?

    For $700 billion, taxpayers deserve more than one big do-over.

    September 22, 2008 at 4:01 pm |
  19. xtina, chicago IL

    Im in favor of bailing out. But then hereafter, make the criteria more stringent for buying, refinancing or borrowing.

    Somehow I don't see Barack Obama- should he be elected- making it harder for lower income people to borrow money.

    September 22, 2008 at 3:57 pm |
  20. KIm

    Evaluate to compare and contrast ! We spend $700 billion on a bailout and can't support $ 500 billion today for 200 mega watts for national security and energy independence that in the long run saves us billions on imports and our dependence on foreign oil ? Raising sugar cane !

    September 22, 2008 at 3:43 pm |
  21. tom cassidy-florida

    For 700 billion start a new bank, then when the others fail buy at a deep discount.

    September 22, 2008 at 3:16 pm |