No Equity Stake, No Deal!

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Well, it’s not quite “no justice, no peace” but I think it works as a slogan.

The point is that financial institutions that want some rescuing from the taxpayers ought to be forced to hand an ownership stake over to the taxpayer that’s proportion to the amount of rescuing they get. That way if the companies themselves experience a post-bailout revival, the taxpayer owns a piece of that upside and we get back the money we spent on the shitpile — or even more. The way the Bush/Paulson plan works, we only get our money back if it turns out that all these “toxic assets” are, secretly, actually pretty good assets. On the one hand, the Bush/Paulson bet isn’t a very good bet. But on the other hand, there’d be no reason to take that bet even if the odds were somewhat better. The public has all the leverage here; only a hare-brained opposition to punishing malfeasance justifies a refusal to make the demand.