Today I heard what might be the most cogent argument against the RTC-like bailout being proposed by the Bush administration. It was given (no surprise) by Newt Gingrich. In essence, he does not like the idea of giving the government $700B to run around buying worthless investments. Given the propensity of congress to give money to their friends, the idea of allowing the government to spend that much on handing out cash in exchange for dubious investments is alarming.
Having said that, I still like the idea. I'm willing to make the leap of faith to think that there will be sufficient safeguards to protect us from the congress going crazy.
Additional posts worth reading: Robert Samuelson discusses how this is a crisis of confidence in the banking system. Banks are wary of lending each other money because their afraid the other bank is using garbage equities as collateral. It's like a financial game of hearts where no one knows who has the queen of spades.
Paul Kedrosky makes the great point that perfect is the enemy of good enough.
I'd love to hear what y'all think about this deal.