A couple of hundred academic economists petitioned Congress to inform lawmakers of their skepticism about the plan. Their names and reasons, provided by Mal Kline, are noteworthy. Among the reasons:
- The plan is a subsidy to investors at taxpayers’ expense. Investors who took risks to earn profits must also bear the losses.
- Not every business failure carries systemic risk. The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise.
- If taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwards.
- If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, America’s dynamic and innovative private capital markets have brought the nation unparalleled prosperity.