Up today at EPI with two colleagues.
I think there are better options out there for a bailout, but the failure today is not something to celebrate. A better package would include more liquidity infusion in exchange for equity in bailed-out firms; but options are limited given the political environment and the need to do something quickly…
Bailout plan must help the middle class and grow the economy
by Lawrence Mishel, Ross Eisenbrey, and John Irons
Congress is currently haggling over an agreement to bail out the financial markets. While a final agreement is still up in the air, we must not forget than inaction is not an option. Without action to shore up the banking system, financial markets may very well freeze up, stalling the overall economy. And without action to spur job creation and support working people, the labor market will freeze and fundamental economic weaknesses will continue.
Far from being an unforeseeable natural disaster, the current financial crisis is a predictable outgrowth of excessive risk-taking, regulatory failure, and lack of accountability in corporations and government. Unfortunately, we are now in a position of having to act to lower the risk of a global market meltdown.
The administration’s initial proposal to shore up the markets was offensive; it essentially asked for a $700 billion blank check for the Treasury secretary with no oversight, no review, and no transparency. Members of Congress this weekend hammered out a better version that includes taxpayer protections, transparency requirements, and government oversight, as well as provisions that will begin to provide assistance to homeowners. Far from ideal, it nevertheless could have been a step forward if Congress had enacted it.