Wall Street May Be Bailing on the Bailout

The plan may be more complicated than the securities it is supposed to buy.


Considering that the Paulson-Bernanke bailout plan is supposed to be helping Wall Street, some on Wall Street suddenly seem less enthusiastic. Check out what market strategist Ed Yardeni, a guy who has been pushing for the Mother of All Bailouts for months, is telling clients this morning (bold is mine):

I'm getting a queasy feeling in the pit of my stomach about the Treasury's proposed Troubled Assets Relief Program, or TARP...Frankly, I'm not convinced that TARP is even necessary...It would be an extraordinary and unprecedented intervention by the government in the economy.... Is Paulson really in charge even now? His recent hyperactivity smacks of sleep deprivation and too much Diet Pepsi.... On Friday, September 19, the Treasury promptly and appropriately responded by insuring all money market fund shares. That was enough to stem the latest calamity, in my opinion. I think introducing TARP was an overreaction to last week's crisis. Besides, TARP seems to be almost as complex as some of the complex assets that it is aiming to purchase.... I think a simpler solution would be for the SEC to immediately and temporarily suspend mark-to-market accounting rules for mortgage-backed assets. Firms could hold them to maturity (or until the market settles) without having to take crippling write-downs in the process. Ben Bernanke...said he opposes the American Bankers Association request to remove mark-to-market pricing in bank portfolios. A suspension of such accounting would hurt investor confidence, he said. Is he kidding? Hasn ' t he noticed that investors have lost all confidence in bank stocks already? Then again , he is an academic. He may also be suffering from sleep deprivation and too much Diet Dr. Pepper.

Wall Street

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