The John M. Olin Center

Paper Abstract

620. Lucian Bebchuk, A Plan For Addressing the Financial Crisis, 09/2008; subsequently published as “A Better Plan for Addressing the Financial Crisis,” in Economist’s Voice, September 2008, 1-8.

Abstract: This paper critiques the proposed emergency legislation for spending $700 billion on purchasing financial firms’ troubled assets to address the 2008 financial crisis. It also puts forward a superior alternative for advancing the two goals of the proposed legislation – restoring stability to the financial markets and protecting taxpayers.
I show that the proposed legislation can be redesigned to limit greatly the cost to taxpayers while doing much better in terms of restoring stability to the financial markets. The proposed redesign is based on four interrelated elements:

Compared with the Treasury’s proposed legislation, the alternative proposal put forward in this paper would provide a far better way to use taxpayers’ funds to address the financial crisis.

620: PDF