Managing Bailout Only Gets Trickier From Here

Government needs to move carefully, particularly on failing banks: experts
By Kevin Spak,  Newser Staff
Posted Sep 29, 2008 10:09 AM CDT
Protesters march outside of the U.S Treasury building in protest of the proposed Wall Street bailouts, Friday Sept. 26, 2008, in Washington.    (AP Photo/Jacquelyn Martin)
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(Newser) – The Treasury’s bailout plan won’t end the economic crisis, Steven Lohr writes in the New York Times. It’s merely a first, costly step, and overseeing its workings will be a major undertaking for the next administration, as will assisting homeowners and crafting policies for a less credit-happy nation. “This issue is going to dominate the agenda of the next president,” said one economist.

How bailout funds are spent will be crucial in determining its effectiveness, economists say, because bad banks must be allowed to fail. Japan tried propping them up in the 1990s, and thereby prolonged its slowdown for a decade. The best example for inaction is more sobering: the Great Depression. As one economist notes, “A recession costs way more than $700 billion.”