This Saturday, tens of thousands of Americans marched on Washington to protest the unprecedented amount of power being concentrated in Washington, DC under the Obama administration. And even the New York Times admits they have a point: “The government is the nation’s biggest lender, insurer, automaker and guarantor against risk for investors large and small. Between financial rescue missions and the economic stimulus program, government spending accounts for a bigger share of the nation’s economy — 26 percent — than at any time since World War II.” And on the …
The economic rescue package that the House will vote on tomorrow provides federal regulators with a broader array of tools to fight the economic problems facing the nation than the version that was defeated Monday. As the effects of the crisis continue to spread, these additional tools are likely to be increasingly important because it addresses the growing lack of confidence in the broad financial markets which extends well beyond the crisis with mortgage backed securities. The centerpiece $700 billion government purchase of troubled assets remains essential to get those …
Two stories in The New York Times today demonstrate why the increase in the level of deposits the FDIC can guarantee (from $100,000 to $250,000) will help address the spreading financial crisis. First, on the importance of small businesses to the U.S. economy: Small businesses in America — the 27 million companies employing fewer than 500 people and in most cases fewer than 20 people — account for half of the nation’s output. A downward swing, whether caused by expensive borrowing or pessimism, could weaken the economy and shrink employment. …
It appears that the Senate is already on the road to improving the financial rescue package that the House of Representatives rejected earlier this week. The biggest change in the Senate version of the bill is an increase in FDIC insured deposits, which would rise to $250,000 from $100,000. This is a good first step but more changes are needed: First, not only should Congress raise the level of deposits covered by FDIC to $250,000, the FDIC should be given the emergency authority to suspend the cap completely. This step …
Federal Deposit Insurance Corp. chair Sheila Bair gave a curious interview to US News & World Report this week. While Democrats in the House are holding hearings on a housing bailout that will cost tax payers a minimum of $20 billion, Bair starts the bidding $50 billion: One idea is to provide loans directly to troubled borrowers to pay down principal. For example, if you used $50 billion to pay down 20 percent of the principal on troubled mortgages, you could modify 1.1 million loans. So $50 billion, that’s a …
