As congressional leaders look to adopt a financial rescue plan, three Kansas University professors are among about 230 university economics professors nationwide who oppose the deal.
While the educators say "bold action" is necessary to make sure the financial system keeps functioning, they're not so satisfied by the financial crisis plan proposed by U.S. Treasury Secretary Henry Paulson. That plan would allow the government to buy bad mortgages and other sour assets held by troubled banks and other financial institutions.
The group of economists, which signed a petition sent to congressional leaders last week, urges Congress to slow down with its efforts to resolve the situation. The professors work for universities from across the country, including Harvard, Northwestern, Massachusetts Institute of Technology and the University of Chicago.
"It just asks Congress to take pause, not to be in a rush to pass this complex new legislation," said Paul Koch, a KU business professor whose name appears on the petition. Finance professor George Bittlingmayer and associate dean of academic affairs Keith Chauvin, both KU faculty members, also signed the letter.
The group of economists identified three pitfalls with Paulson's proposed "bailout" plan:
¢ The plan isn't fair to taxpayers. The economists claim the government can ensure a well-functioning financial system, without bailing out particular investors and institutions that made unwise choices.
¢ It's ambiguous and has unclear missions and oversight.
¢ The effects of the plan would be around for a generation, and that weakening "America's dynamic and innovative private capital markets" to calm short-term disruptions is "shortsighted."
"This is an important decision, and we just want them to make sure they consider all the angles before they do something rash," Koch said.
Bittlingmayer said there are varying views about how to best handle the financial meltdown, even among faculty at KU's business school, but he said there's no reason for lawmakers to be in a big hurry when passing the appropriate legislation.
"There are a lot of good ideas out there, above and beyond simply buying up these troubled assets," he said. "You want to do something that saves the financial system but doesn't save people who made mistakes."