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.
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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.”
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