Bailout Bonds: Should Small Investors Buy In? The Obama administration is floating a plan that would allow small investors to buy into the bailouts at a relatively low price, and potentially make money from their tax dollars. But some economists warn that purchasing shares of banks' toxic assets is risky business.
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Bailout Bonds: Should Small Investors Buy In?

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Bailout Bonds: Should Small Investors Buy In?

Bailout Bonds: Should Small Investors Buy In?

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This is TALK OF THE NATION. I'm Neal Conan in Washington. Amid continued anger over government bailouts for Wall Street banks, the Obama administration is floating a plan that would allow small investors to buy into the bailouts at relatively low prices and potentially make money.

It's a chance for you and me to buy, say $500 worth of toxic assets. The idea is that they would become more valuable as the institutions become healthier, a win for you, for the company that markets bailout bonds and a political win for the government. But these assets are labeled toxic for a reason. There are financial and political risks.

Later in the program, pirates are on the Opinion Page this week. Fred Ikle argues it's time to get tough.

But first: Would you consider buying bailout bonds? Our phone number: 800-989-8255. Our email address is And you can join the conversation at our Web site. Go to, click on TALK OF THE NATION.

We begin with Graham Bowley, a business reporter for the New York Times who joins us from our bureau in New York. Nice to have you on the program today.

Mr. GRAHAM BOWLEY (Business Reporter, New York Times): Hi, Neal.

CONAN: And how would this work, if I wanted to buy a bailout bond?

Mr. BOWLEY: Well, it's part of a process that the government is launching, of course, and there's a lot at stake. It's trying to get the financial system working again, and it sees a possible pool of money coming from everyday investors.

Most of the money that it wants to move these things, these sort of mortgages and mortgage-rated securities, off of banks is going to come from the big players. But it sees this pool of money from smaller players, from everyday investors, and it's asked, and it's consulting with the financial industry to come up with products - sort of based along mutual funds - in which everyday investors, you and I, can put in some money, a large amount or even a small amount, down to sort of $500.

You would buy a share in a fund, which then goes out and buys a lump or several lumps of toxic assets from the banks, and then it manages them. And they will rise in value, and eventually they'll sell them, and you'll participate in the profit.

CONAN: Well, Graham Bowley, as this idea goes ahead, we're going to talk about the financial aspects at some greater length in a few minutes, but there are political aspects to this, too.

There's so many people angry over the situation on Wall Street. This is a way, maybe, to, well, ameliorate some of that anger.

Mr. BOWLEY: Yeah. It's controversial, to say the least. This isn't just about finance. The government's identified this pool of money that could help fix a problem, but perhaps more important, it's thinking, is the political bonus.

It knows full well the furor and the outcry over things like AIG, the bonuses that went to AIG, and it wants to avoid that. If this is a success, and in a few months a few very rich and secretive investors, say hedge funds, have benefitted, a lot of people will be angry. But if it can say that, hey, we invited ordinary investors to take part - and indeed some have, and they are also benefitting - then this will puncture some of that political criticism, they think.

CONAN: And I apologize. I continually mispronounce your name. It's Bowley. But there's also some political risks involved. You know, toxic assets don't always accumulate value.

Mr. BOWLEY: Yeah. As I think you said, they're called toxic for a reason, and there's two fundamental different points of view here. The government thinks these are worth something, that they're underpriced and that as the economy recovers, these underperforming mortgages -based on property, mostly - to a great extent will rise in value.

But the market at the moment is valuing them at very little, and maybe that's right. And so if these funds buy these assets and take them away, they may actually fall in value.

CONAN: Well, there is precedent for this. You remember back in the Resolution Trust Corporation days, that was to mop up the losses of the savings banks, what, 15 years ago or so. And, well, big companies, big investors, got in to get those funds, and they made a killing.

Mr. BOWLEY: That's right. That was - those were the big guys. You could only really participate as an ordinary person through buying shares in those companies, those big banks that took over those assets.

Now, the government - and I think it's quite clever. They want to allow people directly to take part, but they are warning - as are the financial industry companies that are putting together these products -they're going to be clear that there's a lot of risk here, and I think you're right.

There's the political bonus. There's also a political risk because if taxpayers who are already paying for this, also then lose on this investment which the government invites them into, there'll be a big political cost.

CONAN: And the model - you mentioned one particular model. A lot of people are going to be reminded of Liberty Bonds, the bonds that were available to help support the government during the First World War and the Second World War.

Mr. BOWLEY: Yeah. I mean, there's a similar sort of proposal to a certain extent, and in that, in the First World War, people were asked to participate and provide financing, and several billion dollars were raised.

This is slightly different. I mean, people can participate and gain a return. It is more controversial. You know, some people think these banks shouldn't be bailed out. But I think the government's not - I mean, it's asking people to take a position on that, but it's also saying look, you can actually just get a pure financial gain here, and why not?

CONAN: We're talking with Graham Bowley of the New York Times. If you'd like to join the conversation, 800-989-8255. Email us: Would you like to buy some toxic assets? It doesn't sound, on the face of it, as if it's a very attractive deal, but it could be, well, modeled and sold as, well, the patriotic thing to do. 800-989-8255. Linda's on the line with us from Philadelphia.

LINDA (Caller): Hello.

CONAN: Hi, Linda.

LINDA: Yes, I've been thinking about buying the - trying to get a hold of some of these assets. I don't believe that the - I think a lot of them, if I'm correct, are mortgages bundled up and sold off, and I sell real estate for a living, and I know that a lot of these loans that are considered toxic, or however you want to call it, are really loans where people put down less than 20 percent, but the chances are very, very good that they're going to continue to pay their mortgages, and I don't believe that it's - they're that toxic. So I would buy them. And if I lost money on them, I wouldn't blame President Obama.

(Soundbite of laughter)

CONAN: Okay. Graham Bowley, is she right? Are these subprime loans, for the most part?

Mr. BOWLEY: Yeah, to a large extent, they are. Yeah. And some - there are two parts to the program that the government is offering. You can buy the loans directly in a series of auctions that'll take place over the summer. That's not really aimed at everyday investors. That's more for more professional investors. But pension funds, for example, could take part and, therefore, as an everyday person, you could participate.

The other side of the program is the securitization, these assets that have been based off those mortgages, and that's where big fund managers like PIMCO or Bank of New York Mellon have said they will swoop in and buy them and put them in their funds, which ordinary people can buy into.

CONAN: Linda, thanks very much.

LINDA: Thank you.

CONAN: Bye-bye. Let's go now to - this is Jonathan, Jonathan with us from Tulsa.

JONATHAN (Caller): Yeah, I was actually just wondering what the primary advantage would be of doing the bonds rather than direct investing in some of these companies. Obviously, I don't know too much about the bonds, but…

CONAN: Well, nobody does. They're not for sale actually yet, and wouldn't be until - well, I guess the earliest, Graham, would be until May?

Mr. BOWLEY: There's an application process at the moment, and the government, the Treasury and the FDIC are asking for people to apply. You sort of send an email and apply, not the investors you or I, but the companies that will direct all this, so PIMCO or BlackRock.

And then the winners are chosen in May, and they are then saying that they will then to start to raise funds over the summer. So late May or June, you could, you know, start paying money into those funds.

CONAN: But Jonathan's question is why buy one of these bonds as opposed to just buying a share of Citibank?

Mr. BOWLEY: True. You could do that, as well, and I suppose this would do two things. You'd be more directly exposed to the economy in terms of the housing market, if you thought that was where there was likely to be a greater upswing. And two, what is happening in this process is the government's throwing in lots of loans and its own money to make it very, very attractive for banks to sell these assets and the investors to buy them. There's a lot of money going in there and boosting up the price of these things. So it's probably better to take advantage of that.

CONAN: And Jonathan, thanks very much.

JONATHAN: Thank you much.

CONAN: And if Linda, our previous caller, is right - setting a price for these things has proven to be a very tricky point all along. If Linda's right and they are undervalued, you could make some money.

Mr. BOWLEY: Right. Yeah. It's quite astounding, the amount of money the government is putting up. It sees this as so important to move those things off of the banks' balance sheets. And you're right. In that process, it will set a price.

So, for example, on the assets, the security side where the funds will buy this money, for every dollar the funds put in, you put in, the government will put in a dollar, as well, a matching dollar, and also lots of loans at low rates. So it is very, sort of, a tasty option.

CONAN: Let's talk with Virgil, Virgil with us from Boca Raton in Florida.

VIRGIL (Caller): Hi, good afternoon. I would just like to point out that there's another way in which you can participate in this program, basically by paying your taxes.

CONAN: And you already are, whether you want to or not.

(Soundbite of laughter)

VIRGIL: That's right. So yes, so I suppose that when you pay your taxes, the government manages those investments for you by buying these toxic assets. So you're going to trust that they will do a good job while - when you're buying them yourself, then you're kind of taking the responsibility yourself. There's a chance that you might make a profit out of that, but there's also a chance that you might not. So I just wanted to point that out.

CONAN: And indeed, he's right, Graham Bowley, that yes, the government is taking an investment position in a lot of these companies, in all the companies, I think, that it's made loans to, and therefore, we all have an interest in seeing that these things get cleaned up.

Mr. BOWLEY: That's right, and he's very clever to emphasize that there's a great risk here. People shouldn't get carried away, I think. But the other point he makes is that the government, mindful of that political fallout, is also keeping ownership of some of these things, maintaining ownership.

So when it sells them, it's maintaining up to sort of 50 percent ownership. It sells them to the fund that you are investing in. It will also keep a share, and if that rises, then the taxpayer benefits. He's right, yeah.

CONAN: Thanks very much for the call, Virgil.

VIRGIL: Thank you.

CONAN: Bye-bye. And Graham Bowley, thank you very much for your time today. We appreciate it.

Mr. BOWLEY: Thank you very much for having me.

CONAN: Graham Bowley is a business reporter for the New York Times, wrote an article, "U.S. May Enlist Small Investors In Bank Bailout," and he joined us today from our bureau in New York.

When we come back, we'll hear arguments pro and con about this idea that Americans might want to buy bailout bonds as we bought Liberty Bonds to support spending in World Wars I and II.

Would you buy some toxic assets? Give us a call: 800-989-8255. Email us: Stay with us. I'm Neal Conan. It's the TALK OF THE NATION from NPR News.

(Soundbite of music)

CONAN: This is TALK OF THE NATION. I'm Neal Conan in Washington. You might have seen or might even remember those old World War I posters: Buy war bonds. Well, soon you might be seeing: Do your part. Buy a bailout bond.

We're talking about a plan floated by the Obama administration that would allow small investors to buy into the funds, buying up troubled assets. Well, would you invest your spare cash to buy some toxic assets? Give us a call: 800-989-8255. Email us: You can also join the conversation on our Web site. That's at Just click on TALK OF THE NATION.

Let's bring two new voice into the conversation. Economist Dean Baker joins us here in Studio 3A. He's co-director of the Center for Economic and Policy Research based here in Washington, D.C. Nice to have you back on the program.

Mr. DEAN BAKER (Economist, Co-director, Center for Economic and Policy Research): Thanks for having me on.

CONAN: And also with us is Ron O'Hanley. He's with us by phone from Pittsburgh, where he's president and chief executive of BNY Mellon Asset Management. He wrote an article in the opinion section of the New York Times earlier this month called "Get In On The Bailout." Ron, nice to have you on the program, as well.

Mr. RON O'HANLEY (President, Chief Executive Officer, BNY Mellon Asset Management): Nice to be here. Thank you, Neal.

CONAN: And we've heard an explanation, sort of, of this idea from Graham Bowley of the New York Times. Dean - excuse me, Ron O'Hanley, you think this is a great idea.

Mr. O'HANLEY: Well, what I think is a great idea is that these assets ought to be made available to the individual investor. U.S. taxpayers are shouldering a very large burden in the rescue of the financial system, and to the extent to which there is an upside available from these assets, individual investors, as well as big institutions, ought to have that opportunity.

CONAN: And Dean Baker, you're skeptical.

Mr. BAKER: Yeah, I mean, I think there's really big problems with this plan to begin with, and I see this as sort of an effort to make it more politically salable. It reminds me back in the '80s when Reagan had his big military buildup. He tried to locate operations, contracts, all over the country to have broader-based political support for the military build-up.

Well, if you think the military build-up was a good idea, then I suppose that's good. But if you think the military build-up was, to a large extent, a waste of money, then it wasn't a good idea. And I'm sort of in that latter camp about this.

I'd rather see President Obama work on designing a good plan rather than trying to find a way to sell politically a very bad plan.

CONAN: So you think this bad politics and bad economics. Is it a bad risk for an investor?

Mr. BAKER: Well, it's going to be a mixed story. Some are going to do well. Some will do poorly. I mean, basically, this is kind of a crapshoot. The big winners in this story are, of course, the banks, because as we heard before, there's very big subsidies in this program for people buying up the assets.

Now that will bid up the price of the assets. So on average, people will come out just about even. Now if you happen to get with a good fund, and they get the right assets, you could do well. On the other hand, a lot of them will lose money.

But the big winners are the banks that are getting a higher-than-market price for their assets.

CONAN: And Ron O'Hanley, we should mention that BNY Mellon, potentially at least, is one of those banks that could do very well.

Mr. O'HANLEY: Well, we may or may not be an investor. We're going to put an application in. But just to get to Dean's point, the troubled assets may or may not be an attractive investment, but what is attractive under the plan put forth by Treasury is the terms under which investors can participate.

The government is providing very low-cost leverage in borrowing to investors, and our point would be that if that's going to be made available to big institutions, why not make it available to the individual investor?

CONAN: Here's a question just to that point from Cullen(ph) in Florence, Kentucky. So we're bundling together assets of unknown value and risk, creating collateralized securities out of them and selling them. The people who create the asset get paid. The ones who sell it get paid, and the buyer takes all the risk. Isn't this what got us into this mess in the first place?

Mr. BAKER: Well, the government's going to be taking much of the risk because keep in mind with the heavy leverage - and again, that's my big complaint about the program. The government will be taking a lot of the risk here.

People should understand if they were to invest in this, some will win, some will lose. The government takes the big downside risk, though, and that does push up the price of the asset.

But it is this sort of thing that did get us into this mess, and one of the concerns I have is we don't even know these will be clean auctions because you do run the risk that, say, Citigroup or some other big actor in this has, in effect, a front come in there and artificially bid up the price of its assets, which does them very well and then has the government pick up the tab.

In that case, if we don't have clean auctions, then the investors here, the individual investors here, will be very big losers.

CONAN: Ron O'Hanley?

Mr. O'HANLEY: Yeah. My point would be that we may not like the plan, but it's the plan that we're dealing with now. And I think it's very important that if this is the plan under which bank balance sheets are going to be cleaned up, that individual investors get the opportunity here.

I think that the government risks losing by winning if, at the end of all this, you have banks' balance sheets cleaned up, taxpayer money returned but all the profits having gone to a relatively small number of large institutions and hedge funds. I think there's too much anger out there now to let something like this happen.

CONAN: Let's get John on the line, and John is on the line with us from Tres Piedras in New Mexico. John, are you there? I'm not sure I'm hitting the right button there, so let's put him on hold, and let's try somebody else. And let's go to - this is David, David with us from Boulder, Colorado.

DAVID (Caller): Yeah, hey Neal. I'm really enjoying your show.

CONAN: Thank you.

DAVID: I'd like to make two quick points. We went from sellout to bailout when it comes to American people. The same people who've sold us out, who threaten our children's future and health care system, so forth and so on, now want to come up with a system such as this.

I think the American people, speaking especially for myself, I'm hungering for justice for those who are responsible for where we're at now. And that's the only way that it will restore my confidence in the system as, you know - as far as this capitalism was the problem, now capitalism is the solution. I don't buy that. I think we need some practical common sense and apply some justice. That's what the American people is hungering for.

My second point is that how long are we going to continue to allow just the rhetoric of one plan fits all? Because it does not. And I think we need to look at this thing a little more in depth because one solution for one issue doesn't really apply to all of us. All of us have different issues here, far as taxpayer victimization, and I think we need to look on the justice side of trying to fix this more than…

CONAN: You seem to be getting back to your first point again, David. And by justice you mean prosecute these who were responsible here?

DAVID: For sure. I mean…

CONAN: All right. I'm just trying to get to your…

DAVID: …is hungering for. We want justice before anything.

CONAN: Or let's see - certainly, Dean Baker, that goes back to the anger that we're talking about. David is one of millions obviously still furious about this deal.

Mr. BAKER: Which I think he has every right to be. And, you know, saying capitalism is the problem, capitalism solution, actually, they're not allowing capitalism. In capitalism, Citibank would be out of business. All those people would be walking the street, looking for a job. Same with Bank of America…

CONAN: Which would be justice of a sort.

Mr. BAKER: It would be justice, and that would be capitalism. We're not doing capitalism. We're doing welfare-state conservatism, where government is coming in there with buckets of money to keep the guys who got us into this in business.

I understand totally someone being outraged. I don't understand any justification whatsoever for this policy. We could do better policies.

Furthermore, what amazes me is we got into this because these people refused to see an $8 trillion housing bubble. How you could miss that -I mean as an economist, as someone in finance, how you could miss that is absolutely mind-boggling to me. It's an unbelievable act of negligence, stupidity, whatever word you want to use.

They still seem to be missing an $8-trillion housing bubble. It's deflated. The assets that we were arguing about last summer have fallen. The underlying value of the housing in cities like Phoenix, in Los Angeles, the bubble cities, those have fallen by more than 20 percent.

We should expect the price of the assets to be at least 20 percent lower today than they were six months ago. There's no recognition of that. This is otherworldly.

CONAN: Ron O'Hanley?

Mr. O'HANLEY: Well, I think Dean's point that there was a housing bubble and that we need to deal with it is spot-on. The point is we have to deal with it. We can't just keep looking back and saying why did we miss the problem.

The plan put forth by Treasury actually has a lot of incentives to not overpay for assets because while it's attractive, there's attractive terms, ultimately, this is a risky investment.

The investor risks losing all his or her money. So the incentive to actually overpay for the assets is quite low. I think we all agree that we need to clean up bank balance sheets. So we have a plan in front of us. Let's get on with it.

CONAN: Here's an email from Gerald in Kingston, New York. People buy lottery tickets all the time. It's a gamble with a high payoff, and better than that, it's betting on a good outcome. I wouldn't put the rent money up there, but if a person scraped up the coffee and the cigarette money, the Wild Turkey, etcetera, etcetera - and, oh yeah, the lottery money, sure.

This from John. He says the real question here is on what terms these toxic asset bonds will be sold. The big money organizations are being offered these assets for pennies on the dollar, backed by the U.S. government so that the risk for the big players is negligible. If the government is going to offer the same term to individual investors, one would be almost foolish not to participate. If, as I'd expect from Geithner, he adds, he's reserving this sweetheart deal for his banker friends, this becomes just another way to cheat the American people, and we'd be foolish to buy in.

And I don't think, Dean Baker, we know the terms of the deals yet.

Mr. BAKER: I don't think we know, either. No. I mean, a lot - this is one of these cases, again, where the devil will really be in the details. We'll have to see what it looks like.

CONAN: Ron O'Hanley?

Mr. O'HANLEY: Well, I would agree with that. I think that the big term we don't know is the price of the assets. And if investors overpay, then no matter how much leverage they get, they're not going to get a return. So the key missing item now is the price of the assets, and we won't know that until the auctions start.

CONAN: And is there any way to know - these assets are not all exactly the same, one presumes. There's differences among them. Are they going to be rated differently? How do we know these assets are better than those assets?

Mr. O'HANLEY: Well, that's where the individual investor needs to think about who he or she is going to, in essence, hire as their fund manager, because you are relying on the fund manager to make that kind of selection and decide which assets to buy, which price or which assets to decline on.

Mr. BAKER: Yeah, one of the problems that I saw in a program like this is because we knew something like this was coming, it probably actually worsened the situation because there are some assets in this group that are probably reasonable bets at the price that the banks were asking for. But if you were an investor and you were looking to come in and you knew the government was just about to offer a big sweetheart deal like this, you'd put it off. So those investors that might have targeted some of these assets, they're going to do very, very well indeed.

Now I don't know if they're the ones that are going to be opened up to the public so that you and I can put down our 2,000 or 5,000, or whatever might be, and buy into it. But there will be some people who certainly will do very well on this.

CONAN: Now, let's go to Jason, Jason with us from Ann Arbor, Michigan.

JASON (Caller): Hi. I just have some comments with regard to - the whole thing that got us into this mess was businesses, entities with all their resources, financial institutions, who didn't understand or couldn't value these securitizations. They have an inability to understand them, got us into the mess. And now, we're going to look at individuals and say, with all the complexity underlying these securities and evaluation that an individual consumer is going to be able to - without the resources that big companies have, be able to assess the value and these securities?

All it's going to do is create another problem where we had businesses overleveraged and not understanding these securities. Now we're going to transfer that to the consumer. The underlying problem in this whole crisis - and still, I don't hear a lot of people addressing it - is the fact that everyone in this society is overleveraged and we won't recognize it. The consumer's overleveraged. Businesses are overleveraged, and the government is overleveraged. And until we recognize that fact and we stop taking out additional leverage, the situation isn't going to be rectified.

CONAN: And by leverage, you're talking about debt, Jason, basically.

JASON: Yeah, yeah…

CONAN: Okay.

JASON: …everyone's overleveraged…

CONAN: All right.

JASON: …government, individuals, and…

CONAN: We all owe too much money. Let's get a response from Ron O'Hanley.

Mr. O'HANLEY: Yeah, well, the caller makes a very good point. And what we have to remember here is what these assets represent are pools of mortgages. So somebody, the fund manager, needs to make a judgment on what percentage of those pools are actually going to pay and then price the asset or bid in the auction appropriately. So he's absolutely right. If these aren't priced appropriately, then they're not going to be a good deal.

But the second point I would make here is that why shouldn't - nobody's saying that the retail investor should buy these. What I'm saying is that the retail investor ought to have the opportunity to buy them if he or she wants to and if it's part of an overall investment program that they have.

CONAN: Yeah, Jason, nobody would be forced to do this.

JASON: Yeah, but I just don't think the individual consumer has the wherewithal to understand the complexity and…

CONAN: But, if that's the case, then they're not going to get very many people willing to make the investment.

JASON: Well, people will take the opportunity, they just won't understand just like the financial institutions didn't understand. And then we'll have another mess that we need to bail out soon.

CONAN: Well, thanks for the call, Jason.

JASON: Sure.

CONAN: Bye-bye. We're talking about the idea of bailout bonds floated by the Obama administration. They could be available later this year.

You're listening to TALK OF THE NATION from NPR News.

And let me reintroduce our guests, Dean Baker, economist and co-director of the Washington-based Center for Economic and Policy Research, with us here in Studio 3A, and Ron O'Hanley, president and chief executive of BNY Mellon Asset Management, with us on the phone from his office in Pittsburgh. He wrote an op-ed in the New York Times, "Get In On The Bailout."

And let's see if we can get another caller in the system. And this is Dick, Dick with us from Portland, Oregon.

DICK (Caller): Hi, Neal. Thanks for taking my call.

CONAN: Sure.

DICK: Yeah, I would not buy these bonds because, on one hand, it's my money buying my money. You know, that's the way I feel about it. We've already bailed these banks out, and now we're going to, you know, put more money after that. I really think this is a solvency issue, and that what I'd rather have the government do is tell me the banks that are okay, that didn't get involved in all the craziness, and let me invest in them and let them put out mortgages and make mortgages to people who can pay back the loans and sort of start over again. That's my comment.

CONAN: Dean Baker, has the government told Dick and everybody else the banks that did not participate in the craziness by those banks that didn't get any money?

Mr. BAKER: No, no. Well, just the opposite. I mean, we just had the stress tests that the government put the banks through, and now we're not being told anything about it, who passed, who did. I guess they all passed. Paul Krugman had a great line, this is self-esteem week. Everyone passes.

CONAN: Right. All the banks are above average.

Mr. BAKER: Yeah. And, you know, this is just not serious. And it's really unfortunate. That's why I see this as, at the least, a divergence - digression, if not actually absolutely harmful in the sense that we could be losing hundreds of billions of dollars. And that's real money. I mean, I was kidding - I wouldn't really say kidding. We're talking about putting up a trillion dollars for this. Now, we aren't going to lose all that. But the trillion dollars is equal to 300 million SCHIP years.

We have really big fights in this town over sums of money that are 1,000th as much as we're talking about spending here, or putting up at risk here. And the idea we're just going to make this available without careful thought, it's a really bad idea, in my view.

CONAN: And SCHIP was the expansion, the state services for children's health care that was…

Mr. BAKER: That's right. I'm sorry. Been in DC too long.

CONAN: And Ron O'Hanley, is Dick's point a good one? You know, he'd like to support real mortgages to real people.

Mr. O'HANLEY: Well, nobody's debating that we need to understand who are the solvent banks and which aren't the solvent banks. But the only way we're going to get the financial system kind of back on its feet and operating again is to clean up these balance sheets. There's many different ways to go about that. The administration has chosen this route.

I mean, the other route they could have chosen would have been something like what was done in the early '90s, the Resolution Trust Corporation. The theory that the administration has with this particular approach is is that by inviting in private money and having private money there that, in fact, that will make sure that those investors have some money at risk, these large investors, and will keep the pricing of the assets at a reasonable level. In other words, we won't overpay for the problem, and therefore cause taxpayers to overpay for the solution.

CONAN: Dick, thanks very much for the call. Appreciate it.

DICK: Mm-hmm. Yup.

CONAN: And Ron O'Hanley, thanks for your time.

Mr. O'HANLEY: Thank you, Neal.

CONAN: Ron O'Hanley, president and chief executive of BNY Mellon Asset Management. If you'd like to see his op-ed called "Get In On The Bailout," there's a link to it on our Web site at And let's also thank Dean Baker, economist and co-director of the Washington-based Center for Economic and Policy Research, here with us in Studio 3A. Thanks for coming in.

Mr. BAKER: Thanks a lot for having me on.

CONAN: Coming up, pirates on the Opinion Page this week. Fred Ikle will join us to argue that it's time for much tougher measures. If you've got a thought on that, give us a call: 800-989-8255. Email us: Stay with us. It's the TALK OF THE NATION from NPR News.

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