Shields, Brooks Weigh in on the Week's Dramatic Bailout Debate

I mean, so that — if you say — just say for purposes of argument that the poison was put in by Fannie Mae and Freddie Mac, by putting them in subprimes, and they were not a good investment.

Well, they just spread like a virus, like a global virus, by the securitization of them and selling them as securities. And so now you’ve got all these other financial institutions who have a stake in them.

And David’s point about, what do you price them at? I mean, if there’s one place where the government ought to be able to exercise some leverage, it’s establishing what the price is. I mean, they ought to be able to go in. I mean, they ought to be able to go in low.

DAVID BROOKS: With one bidder, it’s hard to get a price. Steve Pearlstein of the Washington Post had a good observation, which is you can either punish Wall Street or you can stabilize Wall Street. You can’t do both. We all want to punish Wall Street, but we just can’t do it.

And I think the argument for Republicans is, “You may hate this. A lot of people hate this. But serious people like Bernanke, who are not prone to nationalizing industries, think they’re in a panic.”

And the other thing that’s happening today, by the way, is a lot of community banks are calling up their House members. And the tide of opinion may be against this, but among the bankers and increasingly local businesspeople, they are calling up and saying, “You guys better do something.”

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Posted in * Economics, Politics, Economy, Politics in General, The September 2008 Proposed Henry Paulson 700 Billion Bailout Package, US Presidential Election 2008