Timothy Geithner (the new Treasury Secretary) is scheduled to announce the new financial industry bailout plan next week.
While I appreciate the urgent practical need for this assistance, I find it unacceptable that there is not a condition requiring the recipient banks to increase their lending.
Isn't that the rationale behind the assistance in the first place?
Without this requirement I fail to understand why taxpayer's money shoould be used to help badly managed businesses.
With property prices having dropped substantially and many homeowners upside down on their mortgages, someone has to take the loss. If the owner who borrowed the money cannot, then the bank that holds the mortgage needs to. And if the bank cannot afford to, that bank deserves to fail. That's business!
It appears that the plan currently being financed with taxpayer money will not solve the problem, but simply delay the ultimate pain.
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