TARP II
by Tom on February 7, 2009
in Market Musings, banks
Tom here….
A couple of thoughts about the TARP II (as I’m calling it.)
- If I read through what the Wall Street outlines (excerpts below) it doesn’t sound to me like it’s a bold new initiative that’s substantially different than what TARP I was. Yeah, they are making some changes, but it appears more like variations on a theme than a whole brand new plan.
- If you’ve read what I’ve written before, you’ll see that many analysts are saying that the banking system needs a total “do over.” This doesn’t strike me as a total do over.
- I think we need to ask our government officials, “What confidence do you have that this will work? My confidence level on what it appears they are going to do is pretty low.
I had a boss who used to say, “Don’t come to me with problems, come to me with solutions.” So what would I do instead? Here’s some ideas:
- Ramsey Su makes some good points about what to do rather than loan modifications.
- Cancel America’s Debt and start over – by Niall Ferguson.
- Change accounting and fix banking now – by Roger Ehrenberg
- Adding Liquidity to Banks – by Jesse’s Amercain Cafe
- A Good Bank – by William Buiter
- Deal with it – by Meredith Whitney
Those are just a few of the topics that I think carry a lot of weight in regards to a better way to handle things.
What do you think?
Treasury Plans More Expansive Approach to Financial Rescue – WSJ.com
Treasury Secretary Timothy Geithner’s revamp of the $700 billion financial-sector bailout is likely to rely on a broad range of tools, from injecting additional capital into banks and helping homeowners avoid foreclosure to expanding the roles of the Federal Reserve, Fannie Mae, Freddie Mac and the Federal Deposit Insurance Corp., according to people familiar with the matter.
The final plan isn’t likely to include the creation of a government bank to directly buy bad assets from banks, as was once envisioned. That plan foundered because of its cost and complexity. Instead, the goal will likely be to expand a Fed program to reboot credit markets, among other ways to relieve banks of their bad bets……
…….With the financial crisis unabated, expectations are high for what Mr. Geithner will say. His speech will be a crucial test for the former Federal Reserve Bank of New York president, who is seeking to avoid the route taken by Mr. Paulson. The prior Treasury secretary’s stuttering approach to the financial rescue helped taint its reputation.
“People have the expectation that something fairly bold and creative is going to be presented,” said Brian Bethune, chief financial economist with Global Insight.
