I'm no economist, but the Treasury's new plan looks like a reasonable approach to repairing the financial system. Yes, it is in many respects a re-run of the Bush administration's original proposal. And, yes, taxpayers will be subsidizing the same financial institutions that got us into this fix. But what else are we going to do? I don't see anyone proposing that we create a whole new banking system. Would nationalization--which is probably the way I would go were I in the Oval Office--really create a new group of banks? Or would it reshuffle the old ones?
What does bother me is not so much the idea of public-private partnerships or low interest loans to investors, but the administration's unwillingness to tell Wall Street that this is a new day. The AIG bonuses, tiny as they were compared to the amount that the company has received from us taxpayers, showed that the old culture remains all too intact. If we are to make basic, long-term progress, that needs to change. The people in charge of banks, hedge funds, stock brokerages and insurance companies need to learn an old truth: No one is irreplaceable.