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Democrats and the Bailout September 19, 2008

Posted by trouble97018 in Democrats, Economy, News, Politics.

TPM Cafe

I have made it clear that I think the notion of this Toxic Trust Company Of America is a flawed idea. However, many of my friends on Wall Street think its necessary and it is clear that the panic that has gripped the markets since Monday morning must be calmed. So if we are going to bail out all the bad actors of the last 8 years, we need to get something in return. All of the Wall Street types and neoconservative economists who have resisted regulation will have to surrender in return for the rescue of the capitalist system. Here are some thoughts.

The New RTC-Assuming the government commits $750 Billion to buy the bad loans from many financial institutions, the New RTC must extract warrants to purchase stock in each one of those institutions based on the face amount of the loans they are taking from the companies. Paulson is at heart a trader, and I’m sure he knows that the taxpayers need an upside for taking on all the risk. We did this with the Chrysler bailout in 1979, so there is a precedent.  Source Article



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