Simply hoping for banks to work these assets off over time risks prolonging the crisis in a repeat of the Japanese experience.
The Public-Private Investment Program is better for the taxpayer than having the government alone directly purchase the assets from banks that are still operating and assume a larger share of the losses. Our approach shares risk with the private sector, efficiently leverages taxpayer dollars, and deploys private-sector competition to determine market prices for currently illiquid assets.
When financial institutions come to us for direct financial assistance, our government has a responsibility to ensure these funds are deployed to expand the flow of credit to the economy, not to enrich executives or shareholders.
Monday, March 23, 2009
Geithner and Keynes
US Treasury Secretary Timothy Geithner echoes Keynes in an article published in the WSJ: