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To: JBTFD who wrote (89043)	10/24/2008 12:48:42 PM
From: Elroy Jetson	Respond to of 116555

I think most who bet wrong are suffering horrific losses. The problem the government faced was two-fold: minimization of government losses; and minimizing the damage to the economy. First, it's cheaper for the government to invest capital in thinly leveraged banks than it is to underwrite the resulting losses through the FDIC. I would have preferred terms more punitive than 5% for 5 years followed by 9% for five years - but this was designed by those who preferred a typical Republican welfare program. Second, banks that can't afford to foreclose on bad loans prevent the economy from functioning well - let alone banks that can no longer facilitate credit card transactions, ACH transfers, or letters of credit. If the still working portions of the economy are impaired by problems with the financial infrastructure, then everyone suffers needlessly. Perhaps my views are skewed by having savings deposited in a large number of banks. But I think the facts of the situation explain why these equity investment had to be done, and not in the purely welfare TARP style the Bush Admin originally intended. .