The Progressive


A project of Common Dreams

For Immediate Release
Contact: Sam Husseini, (202) 347-0020; or David Zupan, (541) 484-9167

Assessing Geithner


D'Arista is an economic analyst at the Financial Markets Center. She said today: "Secretary Geithner asserts that the new bailout approach is designed to provide the largest benefit at the least cost to taxpayers. Accordingly, it relies on guarantees in addition to direct lending by the Fed (with capital from the Treasury) and additional capital infusions to banks from the Treasury. But the heart of the program -- a public/private investment fund to get toxic assets off banks' balance sheets -- expands the government's contingency liabilities based on what may be a misplaced assumption about private investors' ability to participate.

"The first problem with the new plan is that, once again, it is bank-based; it ignores the fact that toxic assets are held in every nook and cranny of the financial system -- mutual and pension funds, insurance companies and hedge funds. ... What the Fed should be doing is moving the huge new volume of reserves it has created through its lending facilities from the asset to the liability side of banks' balance sheets -- using them as a substitute for capital and other liability sources while buying some of the toxic liabilities itself under repurchase agreements that can be reversed as prices stabilize."

An economist and writer, Wolff is an instructor at the Graduate Program in International Affairs at the New School University. He said this afternoon: "Today we got more pronounced largess for banks and investors. Again, we have no clarity as to the pricing of assets and the exact plans. It is far too late and far too many trillions into this crisis -- 16 months, $9.5 trillion and counting -- to be dwelling in the land of generalization and reassurance. The markets are fearful of a total absence of specifics and the public is enraged at the lack of transparency and accountability. It is already late and short!"
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Available for a limited number of interviews, Galbraith is Lloyd M. Bentsen Jr. chair in government/business relations at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin. His latest book is The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too.

Galbraith stated this morning: "I think it's fair to conclude that the large banks, which the Treasury is trying very hard to protect, cannot in fact be protected, that they are in fact insolvent, and that the proper approach for dealing with them is for the Federal Deposit Insurance Corporation to move in and take the steps that the FDIC normally takes when dealing with insolvent banks." Video and transcript.
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A nationwide consortium, the Institute for Public Accuracy (IPA) represents an unprecedented effort to bring other voices to the mass-media table often dominated by a few major think tanks. IPA works to broaden public discourse in mainstream media, while building communication with alternative media outlets and grassroots activists.