The Bailout We Deserve

All the discussion has been about the Bailout being targeted at big wall street bankers. Implying that the government is going to spend 700 billion on helping those poor bastards with their yaht and third home payments. Luckily our Congress is fighting back against these big wigs and they’ve attached enough strings on the bailout package that there is now a chance that nothing will get done. Down with the Wall Street bailout, up with the Main Street bailout.

The problem is that this IS a Main Street bailout. The idea is to provide liquidity by purchasing toxic assets off of banking balance sheets. Yes, these are the same toxic assets that poor risk management has caused billions in losses at banking institutions. This will provide enough liquidity for normal business and interbank lending. Additional, this will (hopefully) send Banks back to making mortgage loans to people without enough to money to make down payments, credit cards for people with more debt than they make in a year already, and student loans to C students to get full rides at State Colleges. Guess what, big bankers, CEOs, and Wall Street titans are going to do pretty well of off this.

Cancel the bailout, it won’t hit the Wall Street titans or the big banks. They’ll just cut down on low probability lending and ride this one out. It’ll be a rough couple of quarters but they’ll come out ok. And they’ll still make more a small fortune. However, the small businesses that need to make payroll are going to have to cut back. Maybe delay a payment or two. Small banks that need to borrow money from larger ones to shore up their balance sheets are going to be left in the wind. Walmat will have no problem accessing temporary funding for their operations, but Ted’s Hardware probably will.

Other plans, such as mortgage restructuring plans are going to benefit those Wall Street big wigs too.

Now, I think there are plenty of things that can and should be changed in this bailout bill. However, with the popular rhetoric about “Bailout for Wall Street” I suspect we’re not going to get the bailout we need. We will however, get the Bailout we Deserve.