Orange County Register

Esmael Adibi, head of Chapman U.’s economics program, is back in DC, in part, advising some congressional staffers on the bailout bills floating around the Capitol. (That’s Treasury Secretary Hank Paulson in this photo briefing the media on the progress on his plan.)

Just before the Senate votes tonight on its share of the package — the House nixed a similar plan Monday — Adibi was pretty blunt in his assessment: “I do not like these plans, but at this point there is no way but to vote for it.”
Adibi is usually against government intervention in business crises.

But this time, without some quick and significant relief, a growing credit crunch will strangle the economy. “The liquidity trap is serious,” he says. “Banks won’t even deposit money with each other; it’s not just about housing — it’s limiting all sorts of borrowing.”

Abidi would prefer to see the federal government boosting lending by investing in ailing banks instead of the plan to buy hard-to-sell bonds to support more lending. Famed investor Warren Buffett has done two such deals recently: getting high-yielding stakes in investment bank Goldman Sachs and conglomerate GE. (MORE HERE!)

However, Adibi says his talks with Washington insiders convinces him, much to his chagrin, that there’s no political will for direct investment into corporations.

In the end, Abidi doesn’t think whatever plan gets enacted in coming days will cure the economic recession currently unfolding. “It’s just gonna be a waste of taxpayer money,” he says.

Other meltdown coverage …

• Congress leaders optimistic on revived bailout
• Stocks end relatively calm day with modest loss
• Tight credit, financial chaos slam auto sales
• Credit markets tight as Senate vote looms
• Gov’t launches mortgage aid program
• Senate votes tonight on revised bailout. Agree with changes?
• Did political donations swing bailout vote?
• Are four big lenders enough?
• Bush calls for congress to act; candidates push plans
• WaMu’s odd subprime timing
• Poll respondents tell Congress hands off on bailout
• O.C. Realtors say bailout key to restoring housing market

You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.