A Congress that passes this bailout bill is no different that the Congress that decided to go to war with Iraq. What we have is a deliberative body that isn’t deliberating. They are simply letting someone else (the Administration – AGAIN) define both the problem and the solution and doing tinkering around the edges – at most. They ought to step back and really think this through – at least some in the House have done so and recognized that this doesn’t really solve the problem.
The key in this kind of situation, is always implement the cheap solutions first: 1)Change mark-to-market rules – see On the Bailout for a way to deal with that; and 2) Publicize where the money is – if the problem is that people can’t get loans, it may really be that they just can’t get them as easily or as cheaply. There is a difference between hard and impossible. It is still possible to get money - it just may not be a 5 minute process like it has been in the past. For example, it is possible to bypass banks using services like Prosper. com (and others). Those in charge should be doing everything they can to publicize where the money is so that those looking for loans will know where to look.
The Treasury and the SEC have deliberately withheld cheap solutions like these from the market because they believe that to put them in play would relieve the pressure to pass the bailout1. Of course it would – and that is exactly the point.
1. see http://online.wsj.com/article/SB122290736164696507.html?mod=googlenews_wsj