I doubt if many people understand that the banking system already stands to be bailed out in a different way — by the FDIC. Paulson’s bailout plan is a substitute for the FDIC bailout route. Suppose there is no Paulsonian bailout. The banking system is insolvent now because it is carrying so many bad loans. The banks fail to meet regulatory requirements if this paper is valued at market value, which is 30 cents on the dollar or less, from what I read. So, suppose no Paulson plan and the FDIC moves in. Its procedures include merging the insolvent bank … Continue reading Paulson’s bailout vs. FDIC bailout