Attack of the Zombie Policy

Looks like Team Obama is going to resurrect the Paulson plan…or at least an early incarnation of that plant.

FDIC Chairman Sheila Bair is pushing to run the operation, which would buy the toxic assets clogging banks’ balance sheets, one of the people said. Bair is arguing that her agency has expertise and could help finance the effort by issuing bonds guaranteed by the FDIC, a second person said. President Barack Obama’s team may announce the outlines of its financial-rescue plan as early as next week, an administration official said.

“It doesn’t make sense to give the authority to anybody else but the FDIC,” said John Douglas, a former general counsel at the agency who now is a partner in Atlanta at the law firm Paul, Hastings, Janofsky & Walker. “That’s what the FDIC does, it takes bad assets out of banks and manages and sells them.”

Another $700 billion? Lets see, if this costs $700 billion, plus the $700 billion for TARP and Obama is on the verge of getting $900 billion…why its practically Christmas in America when you are spreading around $2.3 trillion dollars.

FILED UNDER: Economics and Business, Government, ,
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

Comments

  1. Did I just read somewhere that the Fed is going to buy up Treasury Notes. Um, they can’t be serious can they?

  2. Dantheman says:

    “Um, they can’t be serious can they?”

    I think they are, simply because since the Fed has set its discount rate at 1/4%, there’s not much room for it to do any stimulating of the economy through its normal means, by lowering interest rates.

    On the other hand, maybe they want to test the proposition I’ve seen countless times in Social Security debates that the Trast Fund is meaningless, since one part of the government can’t owe money to another.

  3. What the hell, why not have negative interest rates if we want to stimulate borrowing! I mean, isn’t that the whole point of the stimulus plan and TARP, to get people borrowing again?

    Who is going to be fooled and for how long by the government buying up its own debt? Remember, it’s turtles all the way down…