“It seems to me the riskiest aspect of the Paulson Plan is the lack of any safeguard to prevent the funds provided to an institution from being used for totally unrelated "business expenses" or other liabilities unrelated to delinquent mortgage loans.
This looks like a "Last chance to party on the public dime" kind of plan.”
kbunkboy on Sep 23, 2008 at 19:41:10
“I agree. Will some of this bailout money go to the top executives of the failed companies to compensate for their success in getting bailout money? Fannie and Freddie CEOs are in line for millions in severance pay, according to the Boston Globe.”
“I'm concerned about the fungibility of the funds provided under the Paulson plan and other bad assets a bank or other such recipient of these funds may have.
To take a somewhat extreme example, could a bank use these bailout funds to cover some totally unrelated liabilities like outstanding bills from "entertainment expenses" incurred lobbying for this bailout plan itself?
In general, how can we guarantee that the bailout is in fact used for the stated purpose i.e., to cover the liquidity squeeze caused by delinquent mortgage loans? It seems to me this is more likely to be used to cover all sorts of unrelated "business expenses", golden parachutes, yachts, ski vacations, etc., etc.”