Taking the Car Keys?

Bailout Politics for Dummies

For anyone struggling to keep up with the fast-moving, ever-changing financial crisis, here's a helpful analogy:

Imagine that the U.S. financial system is a car driven by Wall Street. By now, it's increasingly apparent that the car has been totaled -- thanks to excessive leverage, unsound bets on housing, and negligent overuse of exotic credit derivatives (what Warren Buffett calls "financial weapons of mass destruction").

The principal questions on the table are, "how much? (to fix things), and, "who pays?"

Wall Street wants the government to replace the vehicle it just crashed -- a shiny, $150k Lamborghini that was mechanically unsound -- and give it the car keys. Oh, and it wants to collect fees for overseeing the salvage operation on the wrecked car (watch the towing fees); designing and building the new car; and insuring it (AIG can do it!). It also wants to provide expensive medical care to everyone injured in the crash. And, you'll never guess who's offering to make a rental car available in the interim, on very attractive terms.

Can you say, "financial chutzpah"??

Congressional Democrats want to replace the Lamborghini with a Chevy, and keep control of the keys, at least for the short-term. They also want to own a significant percentage of the new car, and, as a condition of eventually returning the keys, make Wall Street's leadership take driver ed.

Libertarians, think tank-types, and disgusted politicians on both sides of the aisle, think Wall Street should be relegated to walking or taking the bus for awhile (or forever).

So what's the likely compromise here?

Washington -- taxpayers-- pony up the money for a hybrid Camry (oops, Buick) that gets decent mileage, temporarily gets to be co-pilot (or at least sit in the backseat), and gets a 51% equity stake.