As best as I can tell, the Bush administration has convinced itself that it has brought on the Second Great Depression and it is desperate to do something to prevent a full meltdown on their watch.
Their proposed solution doesn’t make a whole lot of sense to me and it doesn’t seem to make a whole lot of sense to economists on either side of the political divide. On the other hand, I don’t see anybody arguing that we aren’t on the verge of a Second Great Depression.
I’m certainly not qualified to opine on how to avoid a Second Great Depression. But I do have two recommendations. Err on the side of not trusting the administration that got us in this pickle, and err on the side of oversight, even if it takes some time to craft the regulatory procedure.