The bailout and taxpayers' money
How the $700 billion for a proposed bailout of financial firms could affect taxpayers.
"The Takeaway" talks to Steven M. Davidoff, professor at the University of Connecticut School of Law, who says it's hard to determine whether the bailout will benefit taxpayers:
" ... if we can restore market stability, and get credit restored so banks will deal with one another, and deal with corporations, this will benefit consumers. The problem that we have right now is ... we basically have no idea what's in this bill. We have a three-page bill that [Treasury Secretary] Henry Paulson sent to Congress over the weekend. The bill is remarkably short ... it's expanding exponentially, but in its initial form, it gave Paulson carte blanche to buy and sell these assets at the prices that he deemed appropriate. And, depending on what he pays for them, or not, the bailout could cost hundreds of billions of dollars ...".
According to Davidoff, the $700 figure currently being thrown around is government money, which is funded by tax payers. The government will spend the money to purchase assets, and raise $700 billion in the markets.
"The battle that's going on in Congress right now is trying to put some authority on Paulson so that we can ensure that having $700 billion dollars to play with -- unprecedented for any person in the history of the United States -- Paulson will be sure to take steps that protect the American taxpayer."
Writing as The Deal Professor, Davidoff is also a commentator for "The New York Times'" DealBook.
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