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Home Front Economy
US defends 'toxic' asset plan
2009-03-23
The administration of Barack Obama, the US president, has defended its plans to buy up billions of dollars of so-called toxic assets from banks in an attempt to encourage lending.

Christina Romer, who chairs Obama's council of economic advisers, said on Sunday that the White House would put about $100bn into its latest initiative to shore up the economy.

Initial government funding for the scheme, which aims to ease borrowing for consumers and businesses, would come from the existing $700bn Wall Street bailout programme, Romer told CNN.

"The crucial thing is getting lending going again. I can't say that enough, and that is why we're doing this," she said.

"The crucial thing is it's being designed precisely so that it is going to be safe. We very much have the taxpayers' interest in mind, but we also have the interest of the whole economy on the mind."

Private investors will also be encouraged to help get billions of dollars of the toxic assets - purchases made by the banks that exposed them to large losses - off their balance sheets.
Posted by:Fred

#7  Whatever else might be said of Tim Geithner, usually implies that the next thing to be said would be in his favor. His involvement in the crisis so far does not speak well of his understanding & abilities to solve it. I don't see the upside potential to bailing out so many terminally ill (insolvent) banks.
Posted by: Anguper Hupomosing9418    2009-03-23 17:47  

#6  Unless Krugman is talking about International Trade, he is really not much of an authority.

Whatever else might be said of Tim Geithner, he has experience at the Federal Reserve Board and he was part of the 'rescue' of Bear Stearns and did a stint in the Dept of the Treasury a decade ago. The plan he came up with (which I admit is something he should have come up with weeks ago) has a lot of iffy stuff, including downside risk to the taxpayer, but there is a lot of upside potential here. Healthy regional and national banking is in the interest of both Wall Street and Main Street.
Posted by: mhw   2009-03-23 17:06  

#5  Even Paul Krugman shot down this plan as it attempts to leave the launch pad: "the real problem with this plan is that it wonÂ’t work. Yes, troubled assets may be somewhat undervalued. But the fact is that financial executives literally bet their banks on the belief that there was no housing bubble, and the related belief that unprecedented levels of household debt were no problem. They lost that bet. And no amount of financial hocus-pocus — for that is what the Geithner plan amounts to — will change that fact. "
Posted by: Anguper Hupomosing9418    2009-03-23 15:18  

#4   Markets seem to like what they've heard so far.

Well, yeah! The serfs are going to be forced to suck up their waste. I say 'their' to include all their 'representatives' who are on their bribe campaign donation rosters.
Posted by: Procopius2k   2009-03-23 11:07  

#3  Markets seem to like what they've heard so far.

pre market Dow, S&P, NYSE & NASDEQ futures way higher this am
Posted by: mhw   2009-03-23 07:13  

#2  It isn't like it was real money.
Posted by: g(r)omgoru   2009-03-23 04:45  

#1  Banks will only get back into lending when they perceive that the system is rebooted with integrity in the process. Buying up toxic paper only puts money on the banks' books and not into the economy. If you want money back into the economy, skip the banks by re-chartering the First Bank of the United States and become the direct lender. Then banks either compete or watch their depositors and business move on to other opportunities.
Posted by: Procopius2k   2009-03-23 02:08  

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