Kenneth L Judd and Karl Schmedders
The Senate Covid-19 bill does not offer a coherent rescue plan based on sound economic principles. The key policy goal at this point must be to get cash to corporations quickly, but do so in a manner that does not create new financial problems, does not interfere with corporate management decisions, and allows the government to share in the upside potential of the future US economy. To insure some rationality to the allocation of these funds, there should be some kind of price to borrowers that does not interfere with the immediate policy goals. For this purpose, we propose that the US government (Fed, Treasury, or some other entity) buys newly issued preferred stock of publicly traded corporations.
