Geithner Bank Plan Faces New Wave Of Criticism
Two weeks after being introduced, Timothy Geithner's bank rescue plan is
facing a new round of withering criticism from economists who say the
proposal is likely to produce major losses for taxpayers as banks and
investors game the system.
In public writings and interviews with the Huffington Post, some of the
same figures that issued early warnings about the current financial crisis
now say that Geithner's designs for alleviating toxic assets from the
nation's banks are inherently flawed. As evidence, they point to the
massive amount of federal funding, in the form of FDIC backing, being
offered to prospective buyers of toxic assets. It is the "closest thing to
risk-free investing -- with leverage! -- around," wrote Andrew Ross-Sorkin
of the New York Times.
More specifically, they have highlighted the seeming ease with which a bank
could effectively drive up the price on an asset it already owns by
creating subsidiary entities to bid on those assets. "The amount of
potential rip-off in the Geithner-Summers plan is unconscionably large,"
said Columbia University's Jeffrey Sachs.
Lees verder: http://www.huffingtonpost.com/2009/04/08/geithner-bank-plan-faces_n_184122.html
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