Levy Rivers's Library tagged banking → View Popular

04 Apr 09

Even leaving aside fairness to taxpayers, the government’s velvet-glove approach with the banks is deeply troubling, for one simple reason: it is inadequate to change the behavior of a financial sector accustomed to doing business on its own terms, at a time when that behavior must change.

23 Feb 09

Second, banks must be rescued. The collapse of Lehman Brothers almost destroyed the world financial system, and we can’t risk letting much bigger institutions like Citigroup or Bank of America implode

10 Feb 09

Some economists leave the impression that the banking sector is a rotting corpse, hopelessly polluted by valueless toxic assets. Geithner takes a different view. He agrees that many bankers did things that are “reprehensible and deeply troubling.” But the big uncertainty is not inside the banks; it’s in the broader economic climate.
Therefore, Geithner argues, the government doesn’t need to go in and nationalize the banks. “It’s very important that we don’t look like there’s any intent of taking over or managing banks. Governments are terrible managers of bad assets. There’s no good history of governments doing that well.”
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- The key, he says, is to create “massive, sustained and substantial macroeconomic policy” that would pump capital into markets to get them working again. The heart of his program is a series of public-private investment funds with names like the Legacy Asset Partnership Bank and the Consumer and Business Lending Initiative. One would acquire toxic assets. One would foster consumer and small-business lending. “There’s a lot of private capital out there that wants to come in. It just can’t get the financing,” Geithner insists. The new programs would encourage private investors, and then once the markets are unfrozen, would “get out as quickly as possible.”

Finally, while the administration will urge banks to increase their lending, and possibly provide some incentives, it will not dictate to the banks how they should spend the billions of dollars in new government money.