Following President Bush’s excellent speech last night, I thought it might be worthwhile to review the various issues contributing to this crisis with a focus on the institutional side of the problem and why these companies need to be bailed out. Having spent the last year and half focused on this problem, I thought my perspective might be worthwhile.
To be clear, I think intervention may very well be necessary and preferred at this point. My biggest concern with the proposals to date is that they: 1) do not allow taxpayers to particpate in the upside of saved financial institutions and 2) have not made it clear that taxpayers may suffer losses on these investments.
The video is a bit long, because I tried to walk through the history as simply as possible. Hope it is helpful.