...that slope is slippery.
In a change from the original proposal sent to Capitol Hill, foreign-based banks with big U.S. operations could qualify for the Treasury Department’s mortgage bailout, according to the fine print of an administration statement Saturday night.
The theory, according to a participant in the negotiations, is that if the goal is to solve a liquidity crisis, it makes no sense to exclude banks that do a lot of lending in the United States.
Treasury Secretary Henry Paulson confirmed the change on ABC’s “This Week,“ telling George Stephanopoulos that coverage of foreign-based banks is “a distinction without a difference to the American people.“»
Foreign banks may get help
I beg to differ…
Leaving that aside, however: this is why getting the government into the bailout business is ALWAYS a bad idea. There is no logical stopping place. If the government can offer loan guarantees to Chrysler, why can’t it also bail out mortgage lenders? And if it can bail out American corporations, why not foreign ones as well? There will always be a good-sounding argument for taking it that one step further, and at what point does it finally become respectable to say, “Wait a minute, stop! That’s going a step too far!“
I submit that the “one step too far” was taken over 70 years ago. Maybe longer.
