Let's consider bailing out average citizens this time, instead of debt and security holders by the government buying the mortgage back securities for $0.25 to $0.40 on the dollar and granting the proportional reductions in value (after estimated transaction costs) to each mortgage borrower, renegotiating payments and interest rates.

Other financial bailouts have also result in windfalls. And, yes, these are "unfair" to the investors and banks who didn't assume these risk. Nevertheless, for the sake of markets, we allow them. Why not allow citizens to be the recipients of the unfair windfall this time?

Posted at August 29, 2007 3:22 PM in response to Larry Summers Calls for Bailing Out the Wall Street Boys