As I understand it: instead of the headache of nationalization, we get a bad bank of sorts, a big tax-payer bail-out, but also an attempt to get private money to buy some of the bad assets in order to flush out a better price for them and to maintain as much of the system in the private hands that know best how to handle it. It seems like a perfectly reasonable compromise to me. And Krugman seems too emotional to be reliable on this. Why are these principles so outrageous?
Moving forward, we as a nation must work together to strike the right balance between our need to promote the public trust and using taxpayer money prudently to strengthen the financial system, while also ensuring the trust of those market participants who we need to do their part to get credit flowing to working families and businesses -- large and small -- across this nation.
This requires those in the private sector to remember that government assistance is a privilege, not a right. When financial institutions come to us for direct financial assistance, our government has a responsibility to ensure these funds are deployed to expand the flow of credit to the economy, not to enrich executives or shareholders. These provisions need to be designed and applied in a way that does not deter the participation by the private sector in generally available programs to stabilize the housing markets, jump-start the credit markets, and rid banks of legacy assets.
Give the man a chance.
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