A University of Louisville finance expert says the bailout Congress is considering to boost the country’s financial markets is a good idea, but it will come with a steep cost.
Professor David Dubofsky says news of a wide-sweeping government buyout of bad mortgage debt eased tensions in markets worldwide last week.
“It was needed because the markets were in turmoil, there was panic on Wednesday and Thursday, we had to calm down the markets, but that said, it will have a cost to us, the American people,” says Dubofsky.
That cost could be up to $700-billion in the plan’s current form. Dubofsky says if approved, the bailout will decrease the likelihood of additional bank failures.
He says the government rescue won’t restore stability to the U.S. economy in the short run, but he believes it’s still a good idea to restore investor confidence.