WaPo: AIG Focus May Backlash

Even the Washington Post writes that the negative attention the administration is focusing on AIG will likely have the negative consequence of deterring private investors from taking positions in troubled banks.

I'd even go further than that. I think that all but the most troubled banks are going to attempt to repay the TARP funds, even if it means curtailing loan originations in order to preserve capital. The tight credit will only help prolong the recession. But as I've stated, if it distracts the public from discussing the $5 trillion waste that the government is in the process of passing into law, then the distraction serves the administration's purpose.