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Off Wall Street, Economists Question Basis of Paulson's Plan
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| Contributor | ArmyDem |
| Last Edited | ArmyDem Sep 25, 2008 09:46pm |
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| Category | News |
| Media | Newspaper - Washington Post |
| News Date | Saturday, September 27, 2008 03:00:00 AM UTC0:0 |
| Description | By Neil Irwin and Cecilia Kang
Washington Post Staff Writers
Friday, September 26, 2008; Page A01
The Bush administration's pitch for a sweeping bailout of the financial system has centered on two simple premises: that the economy could suffer a crippling downturn if action is not taken very quickly and that this action should consist of the government buying troubled mortgage securities from banks and other institutions.
But many of the nation's top economists disagree with one or both of those ideas, even as many top political leaders have swung behind them.
Wall Street economists have mostly endorsed Treasury Secretary Henry M. Paulson Jr.'s plan, or a variation thereof.
But almost 200 academic economists -- who aren't paid by the institutions that could directly benefit from the plan but who also may not have recent practical experience in the markets -- have signed a petition organized by a University of Chicago professor objecting to the plan on the grounds that it could create perverse incentives, that it is too vague and that its long-run effects are unclear. Sen. Richard C. Shelby (Ala.), ranking Republican on the Budget Committee, brandished that letter yesterday afternoon as he explained his opposition to the bailout outside a bipartisan summit at the White House. The petition did not advocate any specific plan, including that offered yesterday by House Republicans. |
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