Second update is this link which says Geithner has a dirty little secret.  I think it's right on.



Original article starts here:

Elizabeth Warren, in charge of oversight of the financial industry bailout, told a congressional panel Tuesday that the Treasury Department has not been cooperating with her efforts to oversee the project.

In one word:  Treason.

C'mon folks, don't shy away from it.  Don't excuse it.  Deal with it.  That it was allowed under Bush does not justify putting up with it now.  Harsh?  Perhaps, but being complacent won't help things. 

If it is excusable, then demand full explanations in detail. 

Geithner's "plan" is fake or criminal. 

I recommend a read of Hussman for a sensible if not quite perfect view and analysis.


Update:

I feel pretty strongly about Geithner's PPIP plan as presented:  It stinks. 

And what bothers me more is that the national debate I'm seeing is framed as Geithner's PPIP "as is" versus Krugman's nationalization.  That's a false frame, there are other options.

Geithner's plan might work as a way to sell off "toxic assets" ... AFTER a bank fails and is taken over by the FDIC.  In that scenario inflating the asset prices makes a lot of sense; I want the FDIC to get the most bang for the buck.  What is insane is to try to inflate prices in the name of authentic public price discovery.  It's one thing to run a fair auction, another to bias the auction from the start.  PPIP does the latter, and puts the burden where it does not belong.  And I say "might work" on purpose.

Further, keeping bank management, shareholders, and unsecured creditors (eg, bond holders) from taking haircuts, this is just a giveaway to no good end.  If Geithner would make those bank players pay the piper as part of PPIP, I might not hate it so much.  What he's planning to do amounts to paying off speculators who have bought bank stocks or bonds in the banks recently at steep discount in the open markets, and allowing mismanagement to continue in their jobs with only token bonus caps etc.. ... while also propping up new speculators who might buy the "toxic assets".  Hey, remember that most of these assets are not real assets like houses, they are capitalized IOUs and sliced up risk category documents, what I call "assetization"

There are other ways to deal with the situation.  Getting it so wrong shows a deep bias at Treasury.  For instance, did you know that PPIP is basically a plan proposed by large bond holder Pimco last fall?  If this isn't treason, it's incompetence. 

Please contact the White House  House and Senate  on this.

And if you disagree with the substance of my position, please let me know how and why!


To review, some other options:  Use PPIP after intervention with FDIC as nominal seller; let problem banks struggle on at low profit margins and help new banks to start up to get lending going (to the extent that bank problems are fundamental causes not effects!!), non-nationalization Intervention, and others....