There appears to be a consensus among the economists - the Hanky Panky is the financial equivalent of unsafe sex, indiscriminantly spreading way too many vital fluids with no way to track what was inserted where and with what devices. The only certainty is that the taxpayer is going to be thoroughly screwed, and not in a good way.
The divergence (and there's not much) is what is the best response to corral the public health threat. There is general consensus that there is no way to actually keep Hank from screwing around until he can be removed from the street corner he's working. At best, we need to insist that he wear a condom to keep the worst of the Hanky Panky contained, which means oversight. He hates it, it cramps his style, some customers won't agree to the terms, it reduces the sensations they feel and doesn't give them the satisfaction they crave.
After that, there seems to be another consensus - not much we can do until Bush is out of office. Until the madame running the operation is finally hauled off, we're stuck with the situation.
Krugman: On the other hand, there’s no prospect of enacting an actually good plan any time soon. Bush is still sitting in the White House; and anyway, selling voters on large-scale stock purchases would be tough, especially given the cynical attacks sure to come from the right. And the financial crisis is all too real.There is also agreement that some actual treatment of the disease itself in the customers must be undertaken in the form of equity shares, kind of like penicillin to treat the clap, in the hopes of correcting the undercapitalization of the market. The big problem here is that the Hanky Panky is not really interested in changing the terms of the transaction, just getting somebody else to front the money and then take it up the, well, orifice of your choice, almost like asking new hookers to pay the customers for the honor of servicing their diseased and insatiable forms.
Stiglitz: No one expects [Congressional Dems] to address the underlying causes of the problem: the spirit of excessive deregulation that the Bush Administration so promoted. Almost surely, there will be plenty of work to be done by the next president and the next Congress. It would be better if we got it right the first time, but that is expecting too much of this president and his administration.
The trouble here is that whether the plan is passed in its current form (unlikely) or with a lot of lipstick, a new set of fishnets and a pocket full of Trojans (more likely), or even with a public health worker standing there, not passing judgment but saying you have to swallow the pill before you get the Panky (not gunna happen), the business is left intact, without fundamental modifications and with the restrictions all on the Treasury side.
That is what gets passed down to the next administration. What guarantees do we have from either side that they won't be perfectly happy to let the business go on as it has, with the taxpayer constantly on the hook for buying the latest social disease and curing it? What happens to the idea that we need to build a public health clinic, have better job opportunities so people are not left gambling their long-term safety in this market, and so forth? We're already hearing Unity Dems saying we can kiss pretty much the entire social safety net good-bye because we have to bail out Wall Street.
What we need Democrats to commit to is radical restructuring of the terms of the power relationship, so the public is no longer being prostituted by the government for the sake of the corporate johns.