This is the Cato Daily Podcast for Monday, October 6, 2008.

I'm Caleb Brown.

With the bailout plan details furiously being worked out,

now that the legislation has already been passed, Cato Institute Senior

fellow William Poole believes that whether or not the bailout fails to quell

markets or make the situation worse, it is now time to begin thinking

about Plan B.

Poole was the president and chief executive officer of the Federal Reserve Bank of St. Louis, we spoke Friday.

Well, I think that we're going to find lots of problems in implementing this proposal which just

passed the House and I guess the President will soon sign it into law.

I believe that people underestimate the difficulty of implementing the proposal.

In fact, I was just listening to some of the discussion on one of the TV channels, business channels.

And people take up this issue about the price that the Treasury is going to

pay and I see these casual comments oh it'll work out all right there'll be a reverse auction. Well I've never seen any details of how this

reverse auction would work. I know of no example in history, nor do I even know of

journal articles that would explain how a reverse auction would work with highly heterogeneous

assets of very uncertain characteristics.

So I just don't think it's workable. So Treasury's

going to have to cobble together some sort of a plan and what I predict will happen is

that the banks, any other financial institutions selling assets to the Treasury,

will know more about the characteristics of those assets, that the Treasury will,

there's asymmetric information here that's inherent and the

...