That Bailout Just Keeps Getting Bigger and Bigger...

Nick Gillespie | November 10, 2008

What's new on the bailout front? If it's Monday, it's got to be time for more taxpayer support:

The U.S. Federal Reserve hiked its support for insurer American International Group Inc to about $150 billion on Monday after an initial bailout attempt failed to stem massive losses.

What about the automakers (didn't we already bail them out a little while ago)?:

The press for a federal bailout of the auto industry increased over the weekend.

House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., said in a letter to Treasury Secretary Henry Paulson that the Bush administration should consider expanding the $700 billion financial rescue to include car companies.

"A healthy automobile manufacturing sector is essential to the restoration of financial market stability," they wrote.

Maybe, says Paul Krugman, a World War II-size jobs program will turn the trick:

F.D.R. did not, in fact, manage to engineer a full economic recovery during his first two terms....

What saved the economy, and the New Deal, was the enormous public works project known as World War II, which finally provided a fiscal stimulus adequate to the economy's needs.

This history offers important lessons for the incoming administration.

One upbeat sign: Kansas banks are wary of signing up for government injections:

The head of the Kansas Bankers Association says the state's banks are reluctant to take part in the capital injection program included in the financial bailout.

Association president Chuck Stones said "banks are very wary of the program" that Congress approved last month as part of the $700 billion bailout. The Troubled Asset Relief Program injects capital in the form of preferred stock.

The Topeka Capital-Journal reported that Capitol Federal Financial of Topeka and UMB Financial Corp. of Kansas City, Mo., have both declined to participate.

Capitol Federal CEO John Dicus said the bank already has sufficient resources to continue lending money to home buyers. Dicus said the program's preferred stock requires payment of a 5 percent dividend rate, and that his bank would have to lend at 8 percent to cover the required rate.

All of this leaves me wondering: Where's My Bailout?