- There are reports that Treasury Secretary Henry Paulson is talking about a Resolution Trust Corp-type solution to the financial crisis as proposed by Brady / Eugene / Volcker and earlier by Alan Blinder. In July, the housing bill passed included a major expansion of FHA loan insurance program of up to $300bn where lenders take a haircut if they choose to refinance their mortgages with FHA. This program is similar to Blinder's depression-era HOLC proposal with the difference that the current FHA program is voluntary. Collective action issues might inhibit the program's viability
- Brady/Ludwig/Volcker: RTC/HOLC type of institution does 4 things: 1) buy unviable paper to restore liquidity in markets; 2) allow orderly restructuring over time without fire sales; 3) keep people in their homes, lessen foreclosures; 4) help FDIC in resolving such institutions--> the new institution will in the short-run require serious money, but ultimate gains to the taxpayer are also possible (as happened with other 2 institutions)