"The bailout of AIG will ultimately lead to more risky behavior in the markets." - Inspired by John McCain

In a dramatic move yesterday, the Fed bailed out floundering insurance giant AIG with a $85 billion loan (in return for an 80% public stake in the company), just hours after refusing to bail out securities firm, Lehman.

Many argue that rescuing AIG was the only way to avoid a global meltdown: "Its tentacles go further in to the avenues of business, as in mortgages, as in credit, as in hedge funds, as in countless ways that affect consumers, that affect drivers, that affect homeowners, affect passengers," said New York's Governor David Paterson.

There are others however, who disagree. According to McCain, bailing out AIG is nothing but a band-aid solution and tax payers should not be penalized for AIG's irresponsibility: "We need to set up a 9/11 Commission in order to get to the bottom of this and get it fixed and act to clean up this corruption," he said in an interview on CBS's 'Early Show.' "The government must make a commitment to the American people that we will fix this and it will never happen again."

Encouraging companies to believe they can be bailed out with tax payers money will only enhance risky behavior long-term, while not offering a solution to any of the underlying ills that plague the economy.

Writes David Leonhardt of the New York Times: "The Bush administration, the Fed and Congress, meanwhile, continue to focus on the immediate crises, with little attention to the underlying reasons that the economy has gotten into this mess — a stagnation of incomes, an explosion of debt and a decidedly outdated, and limp, approach to government oversight… At its core, the current crisis stems from two problems. Regulators, starting with Alan Greenspan, assumed that a real estate bubble couldn’t happen and that Wall Street could largely police itself. And households, struggling with incomes that haven’t kept up with inflation in recent years, said yes when those lightly regulated banks offered them wishful-thinking loans. No bailout can solve either problem."