CBO Testimony on Federal Responses to Market Turmoil
"At the same time, intervention on a massive scale is not without risks to taxpayers and to the economy. Almost by definition, the intervention cannot solve insolvency problems without shifting costs to the taxpayers. Ironically, the intervention could even trigger additional failures of large institutions, because some institutions may be carrying troubled assets on their books at inflated values. Establishing clearer prices might reveal those institutions to be insolvent. (To the extent such insolvencies were revealed, the net effect might not be deleterious. Providing more transparency about the lack of solvency at specific institutions may be necessary to restore trust in the financial system.)"
Testimony here.
More interesting news on this developing situation.
