US $700bln plan pilloried as gov't gift to stupid banks

A UAE newspaper today criticized the US government's plan as being robbed of immediate impact.

According to the paper, the congress's approval for the US government's plan to spend $700 billion came "too late" for the measure to have the immediate impact that it would have had two weeks ago.

It wrote: "The agonised debate in Congress and across the US has so unsettled the markets that confidence will not return for a long time to come, and yet more money may be needed.

"US Treasury Secretary Hank Paulson had the right idea in spending $700 billion to buy all the troubled mortgage bonds from the banks, and so allow the banks to clean up their balance sheets. The government would then own the bonds, and in time would be able to sell them and recoup some of its rescue package." "Instead the plan was pilloried as a government gift to the stupid banks which got themselves into this mess, and as a slush fund from which the senior executives would get massive payoffs. The debate over the Paulson plan was conducted at this ludicrous level, and the House of Representatives rejected the bill. Last week the Senate added a tax cut and a federal guarantee on all deposits, and the House was finally persuaded to vote 263 to 171 for a measure that should have gone through the first time."

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