September 19, 2008

The federal goverment’s proposal for a bailout of the financial industry sounded somewhat familiar to me.  I remembered that I had blogged about a similar proposal about a year ago on Conglomerate.

Robert Kuttner of the Boston Globe was advancing a plan to create a federal agency to buy up troubled mortgages and renegotiate them so that those who could afford it would be able to stay in their homes. The proposal was modeled on the New Deal’s Home Owners Loan Corporation. I thought it was a proposal that merited attention. Many of Conglomerate’s commenters thought otherwise, and condemned the idea as a bailout of greedy, irresponsible homeowners and/or investors.

Without commenting on the merits of the specific proposal that Kuttner advanced (I am sure it had some flaws), I cannot help but think that we could have forestalled the current crisis if government leaders had come together to address the problems when they surfaced at the consumer end.