Recalling a Washington Post quote of Secretary of the U.S. Treasury Henry Paulson’s assertion to George W. Bush that “there is no Plan B” to choose over the $700 billion bank bailout, economist Dean Baker (Beat the Press, 10/7/08) notes that “it looks like the Fed has discovered a Plan B” after all:
It turns out that the Fed can buy commercial paper directly from non-financial corporations needing credit to maintain operations. This will keep the credit markets working even if the zombie banks aren’t up to the task. In other words, the threat of a complete meltdown in the absence of a bailout was nonsense and the media once again got taken for a ride by the Bush administration.
Of course, relying on the central bank to dish out credit to corporations is not ideal, but neither is it ideal to overpay for $700 billion of junk assets on the books of troubled banks. Too bad that the media didn’t spend more time focusing on the options available, instead of selling President Bush’s bailout package.
