It may turn out that their decisions were wrong. However the moves to recapitalise the banks were backed by most economists, finance people and business journalists as a sound measure to try and restore confidence in the markets and prevent an economic catastrophe.
On the other hand the deal which Hank Paulson has given to bail out Citigroup has been universally condemned as being too generous and not safeguarding taxpayers interests. Via Kevin Drum, here is a summary of what economists have said about the deal.
Do check it out. It seems staggering that this is being allowed to happen. Unfortunately Obama is sticking firmly to his ‘one president at a time’ mantra because he doesn’t want to be associated with what Paulson does. I guess that’s fair enough but it would be nice if someone tried to stop this happening.
Sunny updates: I can’t wait for the right-wing libertarian trolls to exclaim somewhere that Citibank should be allowed to fail or that this isn’t symptomatic of most financial companies badly failing obligations to shareholders.
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Filed in: Economics