Bank bailouts propped up the financial system. But we should never repeat them.
By Sheila Bair (original source Washington Post)
“A decade after the massive government bailouts for Wall Street, some of the financial intelligentsia in New York and Washington no longer seem to view them as a bad thing. Rather than distasteful taxpayer handouts to reckless financial institutions, a new narrative holds that the extreme moves of 2008 and 2009 were heroic firefighting measures that the government should be ready to redeploy if the financial sector implodes again.
Bankers and Wall Street titans, for whom this argument carries obvious benefits, aren’t the only ones making it, either. Even some leading economists are expressing sympathy for this view. But the main proponents of this idea are former treasury secretaries Hank Paulson and Timothy Geithner, and former Federal Reserve Board chair Ben Bernanke, key architects of the government’s response to the financial meltdown. They recently co-authored a book to advance the point.”
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