Elizabeth Warren Suggests The Bailout Road Less Traveled (Video)
Elizabeth Warren introduces the April oversight report of the Congressional Oversight Panel: Assessing Treasury's Strategy: Six Months of TARP.
“All successful efforts to address bank crises have involved the combination of moving aside failed management and getting control of the process of valuing bank balance sheets,” the panel, headed by Harvard Law School Professor Elizabeth Warren, said in its report.
Elizabeth Warren, head of the Congressional Oversight Panel for TARP, had her moment in the sun today and took the opportunity to question the Treasury's approach (PPIP) to the banking crisis. Her report recommended receivership for the failed banks and liquidation of their assets. Let's not kid; she is talking about Citigroup and Bank of America.
In the report, Warren’s panel said “it is possible that Treasury’s approach fails to acknowledge the depth of the current downturn and the degree to which the low valuation of troubled assets accurately reflects their worth.”
The official report pdf and video are after the jump.
More from Bloomberg:
The group said it was offering an examination of “potential policy alternatives” for the Treasury and not endorsing any shift at this time.
Still, it said a bank liquidation would be “least likely to sap the patience of taxpayers” and “provides clarity relatively quickly” to the markets.
“Allowing institutions to fail in a structured manner supervised by appropriate regulators offers a clearer exit strategy than allowing those institutions to drift into government control piecemeal,” the report said.
The report also said that past successful financial rescues were accompanied by governments’ “willingness to hold management accountable by replacing -- and, in cases of criminal conduct, prosecuting -- failed managers.”
bank bailouts, bank bailout, bailout news
Apr 8, 2009 at 11:31 PM
Reader Comments (11)
Deposits are protected, right? Does this cost money if there's no run on the bank?
Assets (what assets?) are sold. Shareholders get bagel-ed. Creditors get...pennies?
And derivatives contract counterparties get...? Since Congress is into passing unconstitutional ex post facto laws these days anyway, can't we just nullify the contracts or tax them at 90% or whatever?
What does a big ol' bankruptcy/receivership look like? It's all very abstract to those of us who aren't well versed in this sort of thing.
This Harvard lady will eat you alive, Dartmouth boy.
A receivership would not be noticable to depositors. Nothing changes. It would look and feel like the takeover of WAMU.
It just means the bank bondholders take haircuts and the siezed banks are liquidated.
What a surprise. Rosy scenario wins again.
http://www.nytimes.com/2009/04/09/business/09bank.html?_r=1&ref=business
"What they are discovering may come as a relief to both the financial industry and the public: the banking industry, broadly speaking, seems to be in better shape than many people think, officials involved in the examinations say."
Who are the examiners? What are their credentials? Why should anyone believe them? It was obvious from the start this was going to be a component of a massive "everything is rosy" PR campaign. Sad.
Tokyo (CNN) -- Solace sprouted from the mundane Thursday as Japanese refused to buckle below the weight of mounting tragedies.
In the hardest-hit parts of the disaster-struck realm, thousands of people, innumerable of them frail and senile, settled in into shelters not shrewd when, if ever, they muscle be competent to leave.
They cherished the ordinary. Place in calling for lunch. Or arranging the scarcely any belongings they salvaged preceding fizzy water be illogical washed away their homes.
http://edition.cnn.com/2011/WORLD/asiapcf/03/17/japan.disaster/index.html?hpt=C1
http://dailyhurricane.com/2010/07/why-geithner-opposes-elizabeth-warren-to-head-the-cfpb.html
[snip]
After much thought and careful consideration (which took about 1.5 seconds) I have a suggestion for how President Obama can resolve this conflict. Warren's in, Geithner's out. Problem solved.
http://www.theaustralian.com.au/news/world/arab-bid-for-no-fly-zone-on-gaza/story-e6frg6so-1226037453260
http://market-ticker.org/akcs-www?post=184237