Bailing out continued . . .

The bailout plan was flawed, so to fix it, congress will 1) add tax breaks without making up for them by decreasing spending, 2) put the federal government on the hook for more $$ in bank failures without actually finding money to cover the possible costs (that's what the increase in insured deposits means), and 3) encourage the SEC to let banks pick numbers out of the air when valuing their assets.*

Didn't the credit crisis happen because no one was actually able to pay for the money they borrowed? Not just people with mortgages and loans, but the banks that multiplied those mortgages and loans into "real" money, lending it back and forth until there were so many zeroes behind it that failing to make a payment caused a real calamity?

Oh.

Better pass this bill quick before the "solution" gets much worse.

* The change in accounting rules, which would do away with mark to market valuations, is the real poison pill here. The rule - which basically says an asset is only worth what it can fetch if sold - was adopted following the last banking crisis. Take it away, and stockholders will have to discount financial stocks even further ... if they buy them at all.
Too technical? Think of it this way: You go to the store to buy a box of cereal. The box says it's sold by weight, not by volume. You figure 10 ounces is 10 ounces. Except with the accounting rule change, 10 ounces is no longer 10 ounces - it's 9 ounces or 8 ounces or maybe 2 ounces, because the cereal maker is using his own scale.