Sheila Bair, chairman of the Federal Deposit Insurance Corp., is suggesting that some critics of President Bush's subprime bailout plan may not exactly have the most altruistic motives.
Ms. Bair, who was appointed by President Bush in 2006, told the Wall Street Journal (subscription required) that "I do worry that some of the investors have taken short positions on the ABX," an index based on subprime-mortgage-backed securities.
Well isn't that enlightened. A lot of people have spoken out with intelligent reason in opposition the President's bailout plan. And now the chairman of the FDIC is saying, utterly without evidence, that some of these people have nefarious ulterior motives.
Here's the problem with Bair's "worrying": This issue should be decided on the merits, regardless of the motives of the individuals behind the arguments. Short-sellers will always be criticized for "bashing." But they're usually right. And if the critics of the bailout are making reasonable arguments, who cares if they're short?
It's a really sad commentary on how low the debate has fallen when the chairman of the FDIC is resorting to what is essentially name calling, rather than defending a position on its merits. Happily, some of our bloggers have made cases on the merits -- without resorting to name calling, and they mostly oppose the bailout.
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Reader Comments (Page 1 of 1)
12-08-2007 @ 3:23PM
harlynman said...
Did the President and the Treasury Secretary know that the rate freeze would allow servicers to modify loans for profit without contacting borrowers or requiring their authorization?
Did the President and the Treasury Secretary know the servicers are members of the American Securitization Forum which wrote the framework?
Source: American Securitization Forum, Streamlined Foreclosure and Loss Avoidance Framework for Securitized Subprime Adjustable Rate Mortgage Loans, Executive Summary, December 6, 2007, page 13, third paragraph from bottom of page
How much are they going to charge?
Have the Secretary of the Treasury, the President or the servicers acknowledged the conflict of interest?
12-09-2007 @ 2:40PM
william lindblad said...
Anytime the government gets involved with the private financial sector there will always be individuals ready to take advantage of the best of intentions. The resolution trust is a classic and we can expect something similar. On the other hand, and the government does not get involved we can expect something worse. I would like to remind all that during the great depression of the 30's most of the very wealthy lost up to 3/4 of their assests. However, if one had 10 million to start with and wound up with 2.5, they still had a lot to play with. On the other hand, the little people lost all. At present we have the same type of scenario in which those at the bottom are going to bear the brunt of the pain. All the government is doing is trying to prevent the losses from becoming too wide spread.