More on the Bailout.....

There is lots to read just to keep up with what Congress is considering in connection with the Paulson plan, what progress is being made and why folks think their ideas make sense.  I am still enormously worried about the implications of the Fed (backed by the Treasury) as the White Knight of banks, and what looks like a number of back-room deals regarding who gets what assets (the WaMu forced buyout by JPMorgan Chase looks particularly suspicious in that regard). But now at least it looks like responsible people in Congress on both sides of the aisle are trying to ensure that there is an adequate oversight body, that there is an equity stake for taxpayers in return for coming to the aid of the banks in this way, and that the funds aren't handed over to Paulson in a single lump sum.  I regret that they seem to have taken bankruptcy modification of mortgage loans off the table--that seemed like an essential part of the picture to ensure that there is real aid at the Main Street level as part of this liquidity flush to the banks.

What about the Republican proposal?  Far as I can tell, it hasn't got anything to recommend it. 

• Capital gains cuts for the wealthy?  Geez, what crisis doesn't lead to a  Republican offer of capital gains cuts for the investors who own most of the financial assets as the best solution? 
• More deregulation, when the deregulation frenzy of the freemarketarians is the root cause of the problem, for failure to regulate exotic financial derivatives and other products that have driven the stratospheric profits of the financial institutions and their people prior to this meltdown? 
• More credit default "Insurance" for mortgage assets (when the huge credit default swap "insurance" provided by AIG, much of which represents pure speculative betting by AIG's counterparies, is the primary reason that we now own a piece of AIG for $85 million)?  That's either a bailout disguised as something else or something that won't work to start with. 

For a discussion of some of this, see Tom Rozzo (and linked information) over on Angry Bear, The House Republican Plan: A Bailout or Worse Than No Plan.