The RTC or the RFC: Taxpayers as Involuntary Equity Investors

Do we need a “new RTC” as the U.S. Treasury is proposing—or something else? We believe that an alternative framework is needed. Its key elements should be two: recognition of systemic risk embedded in the illiquidity of mortgage-backed securities and capture of the upside of a rescue for taxpayers, not for banks and (former) investment […]


When you see your neighbor carryin’ somethin’, Help him with his load, And don’t go mistaking Paradise For that home across the road. –Bob Dylan, “The Ballad of Frankie Lee and Judas Priest,” 1968 The credit crisis that followed the collapse of the housing bubble turned into a financial panic on Wednesday, September 17, 2008. […]