Learning to Love the Bailout

Among the criticisms of the Obama administration’s bank rescue proposal is that it’s a heads-I-win-tails-you-lose proposition, with Wall Street flipping the coin and taxpayers coming up tails.

Under the plan, which could be up and running in a matter of weeks, the government will provide up to $1 trillion in financing for big private investors, like the powerhouse asset manager BlackRock, to buy up banks’ bad assets. If those assets subsequently lose value, the investors do not have to repay the government loans, sticking taxpayers with potentially huge losses. If the assets make money, taxpayers get only half the profit.