Tuesday, April 20, 2010
An email from Peter Wallison...The Dodd bill institutionalizes bailouts.
Here is the email I was sent:
"The Dodd bill has reached the Senate floor without any serious consideration of how a program of resolving systemically significant financial institutions would actually be carried out. This would be an intricate task, requiring substantial knowledge of complex assets and even more complex liabilities.
From the beginning, the administration has designated the FDIC to perform this role, and the Dodd bill simply follows that lead. No one seems to have thought whether the FDIC actually has the skills or experience to do it. A bankruptcy court seems a better choice, especially in light of the smooth handling of the Lehman bankruptcy.
The attached op-ed, which appeared in the WSJ earlier this week, addresses this subject.
I thought you’d be interested. Peter"
Here is the content of the WSJ article http://www.funnyeconomist.com/Wallison.doc
Here is another piece Peter Wallison wrote from the American Enterprise Institute regarding the designation of the fed as a "systemic regulator" which is a real bad idea: http://www.funnyeconomist.com/Fed_Wallison.pdf
But you really neeed to read this piece from today...short and sweet and to the point: The president blocked legislation that would have controlled Fannie and Freddie and now has the nerve to talk about "special interests" http://online.wsj.com/article/SB10001424052748704671904575193910683111250.html