It can't be a good long-term sign that the government is creating a new agency to dig the country out of its bad debts, but Sen. Charles Schumer's proposal to do just that has bank stocks rallying hard this afternoon.
The Dow is soaring now, up more than 400 points in late trade, further boosted by a proposed curb on short-selling in the United States and Great Britain.
The future bailouts look similar to the Fed's $85 billion bailout of AIG, and the new organization would resemble the Resolution Trust Corp., established to bail out the financial system after the savings and loan crisis of the 1980s.
Banks, in turn, will succumb to legislation designed to let bankrupt homeowners renegotiate the terms of their mortgages. Unlike other debt, mortgages currently cannot be revamped in bankruptcy.
A quick look at the stocks that are soaring:
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