Six questions on the bailout

Over at City Journal, Nicole Gelinas thinks President Bush, Secretary Paulson and Congress should have taken a deep breath and answered some questions. Read the whole story--I've included just the questions. But I suspect the trillion dollar deal is done. I can see why Obama didn't want to return to DC to provide input. He doesn't want to be anywhere near this when the far left finds out there's no money for the goodies he's promised. As one commenter at Politico observed, ". . . if you were voting for Obama because of all the freebies he promised he will get you, that ship has sailed. That leaves voting for the candidate that is best at keeping our country secure." Here's the questions.

One. Will this bailout plan actively delay recovery?

Two. Isn’t Treasury worried about the dead-weight loss to the economy that the bailout could represent?

Three. How will this plan restart the now-moribund credit markets?

Four. When the Treasury prices mortgage-related assets under its program, what criteria will it use in assessing current values?

Five. Will the Treasury buy derivative securities like credit-default swaps under this program?

(Six) Bonus Question: The proposed bailout plan means that many creditors to financial institutions would be effectively off the hook for mistakes made by the firms to which those creditors lent money. (Injecting government capital into flailing banks, which some have proposed, could carry the same risk.) But in Thursday’s FDIC-engineered failure of Washington Mutual, the nation’s sixth-largest commercial bank, uninsured creditors will suffer losses made through similar management and investor miscalculations. Why is it acceptable for WaMu creditors to suffer, but not the creditors of the institutions that will be able to sell their bad assets to the taxpayer? Aren’t we setting ourselves up for worse problems in the future, by encouraging future lenders to big financial institutions not to worry too much about the toxic assets those companies may be amassing?