Should there be a public option for the credit market?

[So rightwing that I broke the Political Compass!]

I think the opposition is entirely due to your having used the term "public option", guaranteeing that the forum conservatives would automatically oppose the idea.

I can't think of any compelling reason not to extend availability.

[So rightwing that I broke the Political Compass!]

It sounds like crony capitalism gone wild.  Just why anyone would think the government would engage in appropriate underwriting without politics getting involved, and the program not ending up being a Fannie Mae like fail on steroids, escapes me.

This is what's already happening though- the Fed already makes loans to the banks. You may have a point that extending the availability magnifies these problems(while also magnifying any advantages), but these would quantitative rather then qualitative changes.

Most(informed) people seem to consider the Federal Reserve's lending to banks a net positive, despite the crony capitalism and political considerations that distort it's practices. I don't see why that shouldn't be so for comparable lending to individuals.