Saturday, October 04, 2008

Why such a lousy bill?

So the big bailout has passed and been signed into law. As the NY Times points out this morning, now the Treasury has to figure out a price for all those mortgage-backed securities so it can start buying them up. These are the securities that more pessimistic observers refer to as "worthless" and "toxic." Whoopee.

It's striking that even supporters of this bill don't like it, and recognize its key flaw. Former labor secretary Robert Reich calls it "a lousy bill. It doesn't do the most important thing--help distressed homeowners avoid foreclosure." Paul Krugman says "the plan on offer is a stinker," and that "at best, the plan will buy some time to seek a real solution to the crisis." Even the CEO pay limitations that some Dems insisted on are just window dressing, and not likely to have a real impact on excessive CEO pay.

So why was a better bill impossible? All the right-thinking people in Washington and the punditocracy have been reassuring us that this bill, bad as it is, needed to be passed, and passed quickly. But has anyone explained why a bill that actually addressed the root of the problem, and provided more direct help to distressed homeowners and the middle class, was never even considered? There might be a good answer as to why alternatives were not considered. But no one with access to a prominent op-ed page seems to be wondering why. It's just taken for granted that a bad bill was the best we could hope for.

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