What do you think about Allen Meltzer’s views on rescue plan?

BY Business Desk  October 1, 2008 at 5:19 PM EDT

Question/Comment: How do you feel about Professor Meltzer’s solution? He’s with Mellon Institute, and was interviewed just before your segment. He’s against any government involvement, but if we must, then loan money to companies who wish to borrow and repay with interest, and they accept compensation restrictions, etc. Seems simpler than what the Congress will construct.

Paul Solman: As I suggest above, I don’t really see the difference between “buying” with government loans and “lending.” I guess the point is that we get any possible profits in one case, an interest rate in the other. But if the firms go bust, they can’t pay the interest, right? Then what happens? But Allen Meltzer has thought more seriously about this issue than I have — or at least longer — so maybe I’m missing something.