The WSJ discusses the puzzling issue of how far the bailout should go. Should it cover auto loan debt, student loan debt, construction loans? If the bailout were structured correctly, this wouldn't be a problem. The bailout has to be painful, it is not supposed to be a reward for ridiculously overpaid executives who pushed their companies to the edge of bankruptcy. If the government's purchases of bad debt were tied to serious restrictions on executive compensation and the forced sale of equity to the government, then only banks that really needed the money would line up for the bailout. Under these terms, we could include whatever assets the Wall Street boys and girls want to sell.
--Dean Baker
