The Corner

What Should Have Been Asked Last Night

Question – Mr. President, you said a moment ago that the era of reckless, highly-leveraged investments that put us all at risk are over. But the program your administration announced this week would provide for massive taxpayer subsidies for exactly that — highly leveraged, risky investments on the taxpayer’s dime to purchase ”toxic” mortgage-backed securities. It seems to me that you are condemning exactly the thing you are promoting to save the banking system. What am I missing here?

Question — Mr. President, you have repeatedly decried the fact that both businesses and individuals have for too long saved too little, and have lived for too long on on credit. Yet your recovery plan is premised on the idea that we need to get business and individuals to spend more and save less than would otherwise be the case without government. I am confused. Can you explain why the proverbial “hair of the dog that bit us” is the best economic answer going forward?

Question — Mr. President, the program you announced today that would allow the federal government to take over and close troubled financial institutions beyond those in the banking sector would — as Federal Reserve chairman Ben Bernanke told lawmakers today — allow the government to put companies like A.I.G. ”into conservorship, unwind it slowly, protect policyholders and impose haircuts on creditors and counterparties.” Don’t we already have a well-developed system to do exactly that — bankruptcy? What does the federal government add to that process? And why is allowing companies like A.I.G. to go bankrupt so unthinkable when you seem to be proposing exactly that?

Question — Mr. President, a staple of Democratic party rhetoric over the years is that the GOP is the party of big business and the Democratic party is the party of the working man. Yet it would appear to the casual observer that Wall Street banks have hijacked your administration and are moving heaven and earth to socialize their staggering losses. Do you find it worrisome that Republicans are now increasingly inclined to argue that what’s good for Citigroup is not necessarily good for America, reversing the long-established rhetorical order of the political universe? And how comfortable are you with your progressive allies who are now wondering aloud about an administration that argues that bankruptcy is only an option for “the little people”?       

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