Can taxpayers expect to be ever repaid for the trillions they are borrowing to bail out the financial system?
U.S. Rep. Dennis Moore, D-Kansas, just put the question to our embattled Treasury Secretary Timothy Geithner in a hearing on Capitol Hill.
“There is no way we are going to get through this financial crisis without the government taking risks the markets can’t take,” Geithner said.
“Nobody in my position can stand before you and say there is no risk of loss to the taxpayer here. But we’re going to do our best to reduce that risk of loss.”
So now it’s the role of government to take risks that free markets are determined to avoid?
Not to worry. Federal Reserve Chairman Ben Bernanke is on the job, and he told Congress he expects loans to AIG, Bear Stearns, etc. will be repaid at a profit. Meantime, we’ve just avoided a “catastrophic collapse” of the finanical system by bailing them out.
Really? I’m not convinced we did that. But Bernanke said that if it wasn’t for all of these bailouts, Americans’ 401ks would be down 70% instead of 40% to 50%.
Let’s hope their luck lasts if they’re still taking risks no one else will take. Or the next chapter in American history may be Chapter 11.
(PHOTO: Timothy Geithner, from U.S. Department of the Treasury website.)