"Why do we have to have this separate program subsidizing BANKS to buy TOXIC assets?"

[omega minimo]

:thumbsdown: :evilfrown:

Reaganism is over. WAKE UP Americans!!!













http://www.pbs.org/newshour/bb/business/jan-june09/stressanalysis_05-07.html

JEFFREY BROWN: What about the question that, you know, we've talked about a lot here, the question of the so-called toxic assets? Does this help settle that question? Do we know more about the depth of that problem?

ROBERT GLAUBER: Well, we probably know more, but it certainly doesn't settle the problem. What this does is still leave those assets on the balance sheets of the banks. And as long as those assets are there, the banks can't fill their balance sheets up with loans to companies that can hire people, build things, lift the economy.

And that probably is the major defect of this. It leaves those toxic assets in place on the balance sheets of the banks and doesn't give them any real stimulus to move them out.

IT LEAVES THOSE TOXIC ASSETS IN PLACE ON THE BALANCE SHEETS OF THE BANKS AND DOESN'T GIVE THEM ANY REAL STIMULUS TO MOVE THEM OUT.

And that, I think, is really where people will debate this and ask, should there have been a plan that dealt with those toxic assets?

AND THAT, I THINK, IS REALLY WHERE PEOPLE WILL DEBATE THIS AND ASK, SHOULD THERE HAVE BEEN A PLAN THAT DEALT WITH THOSE TOXIC ASSETS?

JEFFREY BROWN: And, Dean Baker, you would say, "Yes"?

DEAN BAKER: Well, I mean, I think there's a real problem with the toxic assets. I mean, they're holding them on their books at prices that are well above their market value, and we do have the Geithner plan that, to my mind, is a serious subsidy.

It's basically this story where you have investors come in taking risk with the government money, which is certainly going to increase the price that the banks will get for those assets, and I'd be sort of inclined to say, well, if the banks are in such good shape, why do we have to have this separate program subsidizing them to buy these assets?

IT THE BANKS ARE IN SUCH GOOD SHAPE, WHY DO WE HAVE TO HAVE THIS SEPARATE PROGRAM SUBSIDIZING THEM TO BUY THESE ASSETS?

So I'm very troubled by, you know, how much money we're giving to the banks through the Public-Private Investment Plan and other routes. And, you know, if the banks are in great shape, why do we have to give them more money?