Like the acronym for the Geithner and Summers Plan — GASP — in the article by Laurence J Kotlikoff and Jeffrey Sachs. And “gasp” is indeed the reaction to the $1 trillion plan to deal with financial institutions’ toxic assets. As Kotlifkoff and Sachs note, the plan can easily be gamed by participants:
The situation is even worse that it looks, however, since the GASP can be gamed by the banks that own the toxic assets to boost the purchase prices…
We’re beginning to see the talent exodus from TARP-funded financial institutions. Yesterday in an op-ed Jake DeSantis of AIG-Financial Products wrote his “resignation letter” saying why he was leaving AIG. One major reason was the raging mob calling for the heads of those who received retention payments, now called bonuses, and the tepid defense that AIG’s $1-per-year chairman gave before Rep. Barney Frank’s rabid committee.
Today we learned from the Wall Street Journal that several top managers at Banque AIG in France…
With the G-20 meeting looming in the midst of a worldwide recession, President Barack Obama sent an essay published today in about 30 newspapers to urge world leaders to work together to take “bold, comprehensive and coordinated action that not only jump-starts recovery, but also launches a new era of economic engagement to prevent a crisis like this from ever happening again.”
In his essay, Obama puts blame on the financial institutions for causing the crisis and the “absence of oversight.”
We must put…
A different take on possible effects of lawmakers’ rabble-rousing on TARP bonuses. Jeffrey Goldfarb at breakingviews.com says that driving out talented financial executives in the U.S. may be a boon for foreign-owned banks in the U.S. in getting new talent, but most especially for London and its global financial powerhouse, the City. Sarbanes-Oxley already caused financial institutions to flee New York for London. The 90 percent tax rate on TARP bonuses might provide a new impetus for savvy executives to relocate.
Still, with London house…
The candidates in the recent presidential election argued about whether one of them was advocating socialism. Actually, it looks like we’re already there. An ever-growing share of economic activity is ending up under government control. Reports USA Today:
The government’s spending surge to ease the financial crisis and a worsening recession is increasing the federal share of the nation’s economic activity close to $1 out of every $4, the highest level since World War II, an analysis of current and projected…
As Cord mentioned earlier, Henry Waxman has been named incoming Chairman of the House Energy and Commerce Committee, of which the Subcommittee on Telecommunications and the Internet is a part. In his role, Waxman is likely to play an influential role in future tech policy fights involving issues such as universal broadband access and network neutrality. While Waxman has laudably defended civil liberties on many occasions, his record on telecommunications lawmaking is quite troubling.
Waxman has embraced forced openness for privately-owned…
…is the title of a useful contribution to the discussion from the International Policy Network in London and the Lion Rock Institute in Hong Kong. Their recommendations for finding a way out of the financial mess are worth attending to:
– Better mechanisms are needed to manage the failure of large financial institutions, some of which may now be both too big to fail and also too big to rescue.
– Open ended guarantees to depositors and other counterparties are expensive and…
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