More bailout notes

Interesting post from economist Dean Baker:

Almost every economist I know rejects the Paulson approach and argues instead for directly injecting capital into the banks. The taxpayers give them the money and then we own some, or all, of the bank. (That's what Warren Buffet did with Goldman Sachs.)

This isn't about begging for a sliver of equity as a concession for a $700 billion bailout, this is about constructing a bank rescue the way that business people would do it. We have an interest in a well-operating financial system. There is zero public interest in giving away taxpayer dollars to the Wall Street banks and their executives.

This seems like a pretty good idea, and would balance the necessary evil of spending gobs of taxpayer money with the benefit of the taxpayers gaining meaningful investments, instead of just the act of saving the banks.

Maybe this is the next approach our legislators should take while tackling the biggest issue of the day.