For the sake of clarity: in my view, yes, the $700b (or some such number) is necessary to stabilize the entirety of the US banking industry. The lack of controls and, again, oversight built into the original proposal were insufficient. Finding a way to use the money without rewarding bad behavior by bankers is also very important.

Stupid people who bought more house than they could afford will be a more difficult issue to address. The regulations (and, frankly traditional standard banking practices) that were supposed to prevent people from getting loans they could not afford had been removed at the behest of the banking industry - so where does the blame belong? Bankers who had prudent regulations removed; Presidents and Congress who did the biding of the banks and removed such regulations; or with those who accepted loans they had no business being offered in the first place.

These loans are a sophisticated business. Could the average citizen be relied upon to actually know enough about financial institutions and these loan instruments to recognize the peril? Not reasonably. Just as there are government standards for many other forms of commerce such as building construction or food safety, citizens can not be expected to know all things about all subjects.

Because of the complexity of the banking system, citizens should be able to rely on government to set regulations that ensure a stable and appropriate system. Government did not

September 23, 2008

It is deja vu all over again listening to Treasury Secretary Paulsan brow-beat Congress regarding passing the $700 Billion bailout of the financial services industry - trust us; do it now; don't change anything. Last time the Bush administration brought us this kind of song-and-dance it was the Patriot Act. That legislation was disasterous for the average citizen (through loss of tax dollars and civil liberties) while heaping benefits on the wealthy (Halliburton and Blackwater).

This sub-prime mortgage crisis has been nothing more than a pyramid scheme that relied on home prices to escalate at unsustainable rates. While the difference between the current crisis and the circumstances that led to the Great Depression seem distant and different they really are not. Out of control greed of financial institutions and the inability of our elected officials to keep their eye on the ball and not get sucked into the glamor of the high-roller big-spending life styles of Wall Street types.

For long-term stability, we need legislation that sets a fair and restrained set of rules that allow financial institutions to make appropriate returns and rewards picking innovation and productivity. Our financial institutions got caught up in betting on inflation in the housing market rather than real economic stimulation.

Notably absent from the discussion as to the root problem of our current crisis is campaign finance reform.

What gave rize to the black hole that is the sub-prime lending debacle? A lack of a regulatory structure that would prevented bad loans and then the further leveraging of those bad loans. And why was the regulatory scheme not in place? It had been dismantled over the last 25 years by Presidents that have been friendly to the desires of Wall Street and Congresses that have been unable or unwilling to resist the death of regulatory oversight.

And why did Presidents and Congresses feel compelled to not regulate fiancial institutions. Bankers and and those running investment firms are large financial contributors to politicians and they operate sophisticated lobbying programs; our government allowed policy to be set by the regulated.

The US needs to change election law substantially. Until we do, we can expect a government that continues to cater to the rich and influential and, as such, we should expect corporations and the wealthy to continue to realize undue benefit from the government at the expense of the middleclass.