Monday, September 22, 2008

A Light, Though Dim, at the End of the Tunnel

via Krugman

This sounds like a move in the right direction. If you're interested in the text then Politico has the text. (warning PDF) This is a major challenge to Paulson’s approach by Dodd. I think the ball is in Paulson's court to explain why this isn’t a saner way to approach this problem. Senator Dodd is earning his keep on this one.

Further from Krugman...

I’ve had more time to read the Dodd proposal — and it is a big improvement over the Paulson plan. The key feature, I believe, is the equity participation: if Treasury buys assets, it gets warrants that can be converted into equity if the price of the purchased assets falls. This both guarantees against a pure bailout of the financial firms, and opens the door to a real infusion of capital, if that becomes necessary — and I think it will.

Positve feedback from Krugman and he feels that this plan or something like it has a good chance going forward. Let's hope so.

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