Atrios writes that “this article makes clear Timmeh still doesn’t know how to find the pony in the shitpile.” And offers as a suggestion “Hint: you can’t.” I’m inclined to agree, but I think that what the article actually makes clear is that cost rather than ideological taboos is preventing the administration from undertaking a [...]
Atrios writes that “this article makes clear Timmeh still doesn’t know how to find the pony in the shitpile.” And offers as a suggestion “Hint: you can’t.” I’m inclined to agree, but I think that what the article actually makes clear is that cost rather than ideological taboos is preventing the administration from undertaking a Swedish solution to the banking crisis:
Many financial experts estimate that the nation’s banks are holding as much as $2 trillion in troubled assets, most of it tied to mortgages. By contrast, the Treasury has less than $300 billion left in the financial rescue plan that Congress reluctantly approved last year.
To avoid asking Congress for more money, Mr. Geithner has been trying to stretch government money by working with private investors, the Federal Reserve and government-controlled companies like Fannie Mae and Freddie Mac, the mortgage giants. But that has introduced other tough policy issues, many of which remain unresolved.
“Their huge problem is that the American public is not willing to accept large losses for large financial institutions,” said Vincent Reinhart, a former Fed official and senior fellow at the American Enterprise Institute, a conservative research and lobbying organization. “Everything they are doing is about having the smallest possible footprint on the federal budget. They don’t want to engage the Congress and they don’t want to engage the American people in that discussion.”
Nationalizing banks would mean nationalizing the banks’ losses. That would cost a ton of money. Money that congress would need to authorize. If I were a member of congress, I would gladly vote to appropriate the funds. But would the actual members of congress? You can see where doubts might creep in. Indeed, where I giving the president advice on legislative matters I would say, at a minimum, that if it’s at all possible it would be better to just keep delaying on the bank issue until the 2009 appropriations bill and the 2010 budget have both passed, lest the price tag of the banking fix drag the rest of the administration’s agenda down with it.
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