[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
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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