Saturday, November 14, 2009
Former Vice President of Dallas Fed: Tarp Didn’t Restore Health of Banking System
Newsweek has a one year retrospective on the Tarp bailouts which contains the following important quotes:
"It hasn't done what [Paulson] said it would," says Jerry O'Driscoll, a former vice president of the Dallas Federal Reserve and a senior fellow at the Cato Institute. "Yes, it saved some banks from going under, but did it restore the health of the banking system? Absolutely not."
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"They didn't extract sensible terms," says Simon Johnson, former chief economist at the IMF. Johnson points out that Paulson didn't ask of its own banks what the U.S. regularly asks of developing countries when cleaning up their banking systems. "One of the first things that's done is to fire the managers that oversaw the problems," says Johnson. "Yet shockingly, this hasn't happened in the U.S. These guys are still there for the most part."
2 comments:
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Ah, yes, compleacency sets in again, and we hear that the bailouts were a "necessary evil" ... without consideration of the increase in moral hazard they have produced that will be with us into the next, bigger collapse....
ReplyDeleteIs Obama a puppet of the global bankers? He is right now. But what about the future? Can he redeem his presidency? I'll say yes if he fires Tim Geithner. Firing Geithner allows Obama to save face with his voters. But does he have the stomach to take on the bankers? I suppose not. So I remain pessimistic in the near term.
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