Bailout

In general I oppose government bailouts of private companies. But I don't consider Paulson's plan a "bailout". For these reasons:

• Government policy expanded the mortgage market with CRA, FHA, Fannie & Freddie
• The fed expanded the market with low interest rates
  
• Government policy explicitly and implicitly guaranteed the loans
• Government policy created the accounting procedures that led to liquidity crises in individual companies
• Government employees undermined confidence in the banking system

Hence the federal government bears a major share of responsibility for this problem. We elected this government and so we, as taxpayers, are responsible to clean it up. If we don't like it, we can elect congressmen that will not be so reckless while crafting government policy. But since some of us insist on voting democrat (haha--actually, both parties are to blame here)that isn't likely.

Still, you might say, nobody really forced these companies to extend loans to bad risks, securitize and sell the loans, insure the loans with complex derivatives, etc, etc, etc. Actually, I would say it would have been a violation of these managers' fiduciary duty if they had not done so knowing that the federal government was backing it all up. I think the managers should get their big payday! They did exactly as they should have and now we have to pay for it---because (through our elected representatives) we said we would! So quit bitching and start voting for true fiscal conservatives.