Bailout churns up skepticism

WASHINGTON, Sept. 23 (UPI) -- Voices of skepticism are growing louder over a U.S. Treasury plan to buy $700 billion worth of risky securities from financial firms, various sources said.

Questions arise from the sheer size of the bailout, the plan to put the decision-making power of what securities to buy in the hands of one federal department and the sense that rich executives will come out on top at the expense of the taxpayer, The New York Times reported Tuesday.

Some of the skepticism is aimed at U.S. Treasury Secretary Henry Paulson Jr., who sought to reassure the public in recent months that the financial system was sound.

"This administration is asking for a $700 billion blank check to be put in the hands of Henry Paulson, a guy who totally missed this," Dean Baker of the Center for Economic and Policy Research told the Times.

Some economists, including former Treasury and Reserve Board economist Douglas Elmendorf, said they believe the bailout should include taxpayers taking over stocks and bonds in the companies they rescue.

"At first it was, 'thank goodness the cavalry is coming,' but what exactly is the cavalry going to do?" Elmendorf asked of the Times.