Elizabeth Spiers argues the Fed had to bail out Bear Stearns, because “the psychological repercussions of a Bear bankruptcy would have been even more devastating than the financial ones.” Similar arguments proliferate: we had to bail out Wall Street to head off a “crisis of confidence.”
Like most Americans, the contours of the current financial tailspin are many stories over my head. But that doesn’t make the fact that our government just pumped in $200 billion in taxpayer money to secure Wall Street, then threw another $30 billion at Bear Stearns–after blocking the creation of tools for bankruptcy judges and states to address the mortgage crisis all last month–any harder to appreciate. Evidently, the psychological repercussions for the millions of Americans who have lost their homes don’t really count.
This week, the scope of this disjunction left even the White House press corps incredulous. From a recent press briefing (and the transcript is worth reading in full):
Reporter: “But people who are facing, say, foreclosures, individuals, the little guys who are facing their foreclosure, are looking at the big guys getting government, if not brokered, certainly they’re overseeing deals that are engineered to sort of keep the big picture financial community afloat, and they’re saying, well, where’s my boost of liquidity?”
Dana Perino: “They’re going to get that boost of liquidity in the form of a stimulus package and a tax rebate that’s coming to them the second week of May.”
Reporter: “But that’s not going to save their houses.”
This is a moment where I really miss John Edwards.