1. Financial Meltdown What next? Jared Bernstein, EPI EARN ‘08

2. What to do? Stabilize housing markets? Not so fast. --Help people stay in their homes? --Mortgage renegotiations? Manage the TARP! Regulate financial markets. Stimulate demand.

3. TARP et al Quid pro quos. Lending requirements. Troubled assets, equity injections, loan guarantees Accountability! The next $350b tranche.

4. Michael Lewitt: While trying to help rebuild confidence in American capitalism, Mssrs. Paulson and Bernanke tried to convince Congress that bank executives would prevent their institutions fromparticipating in the bailout if it meant that their compensation would be capped. One would think, as the financial system teeters on the brink of collapse, that the Secretary of the Treasury and the Chairman of the Federal Reserve could make a more persuasive argument than one that poses the likelihood that corporate executives would knowingly violate their fiduciary duty and refuse to participate in a plan to rescue the financial system because it might limit their compensation. If troubled financial institutions are going to be run by individuals who would conduct themselves in such a manner, there isn’t much hope that any plan is going to work.

5. Joe Nocera, evesdropper… “What we do think it will help us do is perhaps be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way…”

6. Symptoms Tight lending standards Low Confidence Consumer retrenching Upsides? --lower home, energy prices.

11. Treatment Regulate Stimulate Wash out the shampoo economy

12. Common sense… Apply oversight based on what entities do, not who they are. Increase capital reserve requirements. Improve Transparency: Eliminate off-balance sheet entities and monitor positions/liquidity Improve and enforce mortgage underwriting standards Fannie Mae and Freddie Mac: Resolve the ambiguity regarding their public/private status From the perspective of executive compensation, treat government bailouts as bankruptcies, clawing back bonuses and excessive compensation. Create a new financial watchdog agency to implement and oversee these reforms