A roundup of some react to Geithner's bank plan
With precious few exceptions, no one believes what Treasury Secretary Timothy Geithner has proposed to do with the "toxic assets" drowning American banks in red ink will work. Too much reliance on private investors, not enough incentive to get them involved, and fear on the part of these investors that the government will dictate compensation levels as well as bonus policy.
With that in mind, here are a few links so you can make up your own mind.
Brad DeLong has a very helpful FAQ on the plan.
Paul Krugman is still against it.
This is more than disappointing. In fact, it fills me with a sense of despair.
After all, we’ve just been through the firestorm over the A.I.G. bonuses, during which administration officials claimed that they knew nothing, couldn’t do anything, and anyway it was someone else’s fault. Meanwhile, the administration has failed to quell the public’s doubts about what banks are doing with taxpayer money.
And now Mr. Obama has apparently settled on a financial plan that, in essence, assumes that banks are fundamentally sound and that bankers know what they’re doing.
Yves Smith asks "Can Somebody Please Take the Damn Economy Away from Geithner?" Nuff said.
Calculated Risk: "More approaches does not make a better plan."
The New Yorker gives us a long, disheartening (even depressing) look at "Geithner's Economic Brain Trust." With 17 positions in Treasury still not filled, there aren't many brains to pick.
Politico sums up the politics as well as the implications for Geithner.
And here's the Treasury Department's release on the plan.
From what I can gather, if things go exactly as Geithner expects, the plan will work. Since that will never happen, the best we can hope for is a muddled success that staves off disaster and allows the economy and the markets to work their magic and pull the banks out of the hole they have dug for themselves. In this scenario, some banks will almost certainly fail. Which ones and what effect it will have on our financial system will probably be the key to whether we can, in spite of Geithner, avoid the worst case.