No End to Bailout Nation
Brad Setser at Follow the Money gets it exactly right today: “It looks like the U.S. government’s no-bailout policy lasted all of two days.” Adding to that thought, The L.A. Times questions what becoming a bailout nation means for a new administration:
The situation is bound to raise thorny policy issues for the next president, who is likely to face further demands for assistance from mortgage lenders, home builders, automakers and other struggling industries. Economic and legal experts say Congress and regulators need a set of standards for how to treat industries and companies with their hands out, especially when the requests come in an atmosphere of crisis.
“The more the government steps in, the more there are people who want the government to step in,” says Peter J. Wallison, a research fellow at the American Enterprise Institute and a former White House and Treasury Dept. official. “Every time you do it, that creates an equitable argument for someone else to get bailed out.”
So who is next? Detroit? The newspaper industry? What do the candidates think? And while we’re on the subject of bailouts, I find it particularly interesting that the nation’s biggest insurance company swings an $85 billion loan, while down-on-their-luck cities got a measly $4 billion in the mortgage rescue bill- – and they had to fight hard to get even that much.
When it comes to government help, it looks like you’re much better off being on Wall Street than on a street with foreclosed houses.