First We Deregulate--Then We Blame Deregulation

Crisis Prompts Calls for Federal Rescue Entity

By Lori Montgomery Washington Post Staff Writer Tuesday, September 16, 2008; A06

Key Democratic lawmakers said yesterday that the government may need to create a federal entity to manage the assets of insolvent institutions, much as the Resolution Trust Corp. liquidated failed thrifts during the savings-and-loan crisis of the 1980s.

Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, said he sees a growing recognition among economists and even some conservative market observers that further federal intervention may be needed to stabilize markets roiled by waves of foreclosures, plummeting home prices, paralyzed credit markets and a crisis of confidence in some of Wall Street's largest players.

. . . Key Republicans, meanwhile, promised a thorough examination of how Lehman Brothers wound up in bankruptcy and Merrill disappeared in a sale to Bank of America.

That examination "should focus on excessive leveraging…