Saturday, February 07, 2009

Obama's New Rescue Plan For Banks . . .

. . . is remarkably like the old rescue plan that failed

The NY Time reports:
After weeks of internal debate, the Obama administration has settled on a plan to inject billions of dollars in fresh capital into banks and entice investors to purchase their most troubled assets.

The new financial industry rescue plan, to be outlined in broad terms on Monday in a speech by the Treasury secretary, Timothy F. Geithner, will not require banks to increase their lending. That is despite criticism that institutions that already received money from the Troubled Asset Relief Program, or TARP, either hoarded it or used the funds to acquire other banks.

I have just a few simple questions that deserve answers before any bailout decisions are made:

1. Why is Geithner and the senate trying to make decisions without a GAO audit of banks' balance sheets and their off-balance-sheet financial conditions?

2. Why are banks' executives not called in front of Geithner and Congress to testify about on and off balance sheets status? Why is there a different requirement for banks as opposed to auto companies?

3. Shouldn't Geithner and senators know the magnitude of the problems before asking taxpayers to fund?

4. Why are the problems NOT quantified; off-balance-sheet and toxic paper?

5. Why are the 'zombie banks', as Paul Krugman calls them, being saved without more information?

Good questions, eh?

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