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And what does that GOP alternative ask for?
Before the Thursday-afternoon White House gathering, Bush aides were trying to rally support in anticipation of a close series of votes. But congressional Republicans were ginning up an alternative plan that would allow banks to purchase insurance for mortgage-based assets.
In a morning meeting with Sen. McCain, the group proposed charging premiums to companies that hold mortgage-backed securities and using that money to create an insurance fund for these products. The House Republican proposal would also remove regulatory and other barriers that they say block private investors from pumping capital into ailing financial institutions [emphasis mine; Greg Hitt, Damian Paletta, & Deborah Solomon, "Bush Promises Bailout Will Pass," Wall Street Journal, 2008.09.26].
Talk about fighting fire with fire.
Certain regulations caused shares to be worth less than what they could be sold for. Mark to the Market restructuring caused standard homes to be valued equally to those homes that were foreclosed on. Since the forclosed homes were sold at a lower price, so the banks wouldn't lose money taking care of vacant property, the homes in the banks portfolio would have to be valued at the same rate so the companies wouldn't pump up the values of worthless properties. THIS REGULATION was meant to keep worthless shares from being inflated. What it HAS DONE has caused Valuable properties to be worth the same as de-valued properties, which could shortly regain value. But it ends up causing shares to be de-valued also.
ReplyDeleteRegulations work when they are done right. But they are not the answer ALL of the time.
Name one deregulated policy.
ReplyDelete