That's what Charlie Martin had suggested to me (watch PJM for his piece on Thursday). I brought it up here, and one or more people in the comments scoffed at the idea. Well, for what it's worth, here's Larry Kudlow's piece saying the same thing at NRO. Although I've seen Kudlow on TV for years (e.g. on McLaughlin Group), I simply do not know what kind of credibility he has or with whom, whether he's considered one of the foxes guarding the henhouse, or what. But there it is, a lucid explanation of the notion that Paulson's bailout scheme would be a win-win-win-win (yes, times four) for taxpayers.
This piece was published Friday morning. Kudlow claimed Republican lawmakers were getting the picture, but wanted certain changes to Paulson's plan:
I have been in conversation with leading House Republicans all day. And they understand these key points. Unfortunately, this understanding did not materialize in their original meeting with Mr. Paulson a few days ago. But now the actual reality is sinking in.
Another point: Republican leader Eric Cantor has an excellent idea for a federal bond insurance guarantee for straight mortgage-backed paper, financed by private-sector insurance premiums. That will improve investor confidence in mortgage bonds and will make those bonds highly marketable. Importantly, senior Treasury officials have told me that Mr. Paulson will accept the insurance idea as an option in the final bill, alongside the ability of the Treasury to purchase distressed assets.
Sources also tell me that other conditions will be necessary to bring the House GOP along. First, the ACORN slush fund must be removed. Second, the so-called union proxy to run a slate of corporate directors is a big problem. Third, all profits from the Treasury rescue mission must be used to reduce the national debt — 100 percent. Fourth, Republican members are opposed to bankruptcy judges setting mortgage terms and interest rates (Sen. Obama also is opposed). Fifth, the so-called government equity ownership of banks is distasteful because it effectively creates a corporate tax increase on banks at a time when they are struggling. And last, the Treasury secretary’s request for $700 billion is regarded as way too high.
Essentially, House Republican leaders want a slimmer, cleaner Paulson plan supplemented by Mr. Cantor’s mortgage-bond insurance program. I think it’s a good package that would be great news for stock and bond markets that are now ailing badly. It would set the stage for a gradual return to normalcy on the part of bank lenders, including loans to small businesses, consumers, and homeowners. It would be a pro-growth package at a time when the economy desperately needs a prosperity tonic.
Anybody know how many of the changes in that third paragraph have already been made OR might be worked into the next draft of the bill?