This Crisis Needs Rule Changes, Not Federal Dollars

As expected, while the Great Sausage Factory dithers (thankfully, IMHO) the actual bailout, the free market bailout, is well under way. Just hitting the wires right now is perhaps the most visible sign yet of our capital market's astounding ability to punish, heal, and self-correct - Warren Buffett is injecting $5 billion into Goldman Sachs. Battered companies are finding dance partners. Buffett and Goldman are marquis players, but it is happening way way down the financial food chain too. Check this deal out, which was made possible by this rule change. There are many advocates out there for solving this crisis by tweaking some of our regulatory strictures (see here and here) rather than sweeping in with oceans of taxpayers' dollars. Based on the evidence, these people ought to be listened to. There is capital out there, it just can't seem to mate with the demand for capital in certain instances because of regulatory roadblocks. Paulson, Bernanke and Cox should spare themselves the bloviations of the Senate Banking Committee and huddle together and come up with rule changes in their respective domains that will ease the mating of available capital with the need for capital.