As we said in a previous post, the proposed program is designed to hide the fact that the taxpayer is paying for all the losses on the assets and the bank bondholders are unscathed. But according to this comment by John C. Halasz on James Kwak’s Baseline Scenario coverage of the Geithner plan , it’s even worse. The comment is reproduced below (we added the boldface type and did a little editing of it):
As a guest on Fareed Zakaria’s CNN show, “GPS,” Former Treasury Secretary Paul O’Neal said
“if you can’t value the assets, please don’t buy them with my money.”
He calls for the banks to come clean and suggests that many are hiding the truth about their assets. The video of the interview with Mr. O’Neal can be viewed at Paul O’Neal interview
From the Institutional Risk Analyst:
“Apparently, banks that fail the Supervisory Capital Assessment Program stress test will not be broken up as required by law, but instead given more capital at taxpayer expense. This is the solution to the financial crisis embraced by President Barack Obama. There is no market discipline, no bad results for the bond holders who stupidly funded these giant derivatives-driven, risk-creation machines…The policy decision articulated this week by Bernanke and Geithner represents the largest transfer of wealth in American history, yet no legislation and been passed and no meaningful debate has occurred. The biggest danger facing the markets is that Ben and Tim still do not seem to have a clue what to do about the big banks — other than to write more checks against the public trust. The conflict over this decision to pass the cost to the taxpayer, between the Fed, Treasury and the Congress, on the one hand, and the Wall Street dealer banks is staggering, yet nothing is said in the Big Media.”
Thank you John and SAC Capital! Let’s watch which criminals step up to participate…