Paulson's Prices

Congress is concerned about the prospect that taxpayers will be on the hook for $2,300 apiece as part of what Senator Obama fretted yesterday will be a plan by Secretary Paulson to provide "a welfare program for corporate CEOs." Those who have been following Paulson's pattern so far can bet there is not a chance. The treasury secretary has such unusual power as a purchaser to set prices that we wouldn't be surprised, after all is said and done, if the government's losses end up being much less than the $700 billion for which Mr. Paulson is asking for authorization. Many of those mortgage-backed securities are undergirded by homeowners, some of whom will pay their mortgages, and by houses, which, while they may be worth less than they were worth originally, are worth some amount more than nothing, or eventually will be. If the congressmen doubt it, let them ask for a chance for ordinary American investors to participate alongside the government, on the same terms, as bond-buyers, to purchase this formerly toxic paper at Mr. Paulson's prices. We'd bet there'd be quite a few takers.