Bailout Bill

Submitted by kvaughn on Mon, 09/29/2008 - 04:48

The BillThe GoodThe "ACORN provision" has apparently been removed.  It now appears that the entire amount of any profit will go towards debt reduction.

(d) TRANSFER TO TREASURY.—Revenues of, andproceeds from the sale of troubled assets purchased underthis Act, or from the sale, exercise, or surrender of war-rants or senior debt instruments acquired under section113 shall be paid into the general fund of the Treasuryfor reduction of the public debt.

The BadThe 3-page draft that was originally provided by the administration, has now grown into a 110 page monstrosity with tons of references to other legislation.  Whatever happened to the days of the Gettysburg Address? (I know - the word processor!)The legislation still bails out the corporate entities and individuals who made bad decisions.  This will only encourage more risky behavior in the future and limits the ability of wiser firms and people to rightly capitalize on other's mistakes.  In other words, it rewards bad behavior and punishes good behavior.

The legislation does not appear to address the root causes of the mortgage crisis (i.e., the government intervention to promote risky loans) and the bailout actually promotes continued bad behavior.The UglyWhile I do think something was needed, I am concerned that this bill may be worse than the "do nothing" case.  Specifically, I am concerned that this will be a temporary patch that will cover an underlying problem that will only grow worse with time.  I can only hope that I am wrong.