Only one of the proposed new features of the Senate bailout bill even pretends to address the credit crisis, and that's the increase in the FDIC limit.
Some of the others are good ideas, and some are bad, but their purpose is to get votes - and voter acquiescence - not to solve the acute economic problem.
McCain says, "Me, too," about Obama's FDIC insurance increase. McCNN leads with McCain.
Incredible.
So, why is $250,000 of FDIC deposit insurance an obvious idea? CNN doesn't bother to say, but the goal is to prevent a bank run. We're already in a deeply dry credit market. A run could not only kill banks that are basically healthy, it could also tighten credit even further as more and more people and institutions flee risk into cash or T-bills, where they are no longer loanable to stimulate business activity.
