By now, I should quit being surprised… surprised at anything the Treasury and the Administration might try to get this country moving again, and their attempt to restore troubled too-big to close (they have failed) financial institutions. Today’s Treasury announcement of a new private/public partnership to package and auction their problem assets is case in point.
I am struck by the irony of this announcement. Is this not exactly what Treasury originally intended to do by creating the Troubled Asset Relief Program (TARP) late last year to clear the balance sheets of the too big to close? That plan was abandoned almost immediately after its development for fear that purchasing troubled assets from banks would expose the Treasury and taxpayers to paying too low a price for their acquisition. Instead they opted for direct investments in the banks themselves.
Now they design an almost identical plan with one exception…private investors will have skin in the game alongside the government and they have guaranteed a market price by allowing for competitive bids by pension and hedge funds and other would be investors.
I commend the Treasury and Geithner for this initiative… in my view it was precisely what was needed all along, the way TARP was originally intended. Apparently the Street likes it too. Markets are wildly up in heavy trading today following the announcement.
Finally, we have an action by the Treasury that just might save (at least for now) the sinking ships. And all along, all they needed to do was simply rearrange the deck chairs.
It is clear that Treasury will do everything in its power to save the too big too close banks. And once it is evident that they have, let’s hope a future initiative will be to break those suckers up so they can never be too big to close again.
Tags: Texas Community Banking, treasury
