Three months and three-hundred billion dollars of bank rescue efforts have gotten bogged down in a widespread and irrational fear among policymakers: the fear of trying to put a price on banks’ troubled assets. So profound is this fear that the Bush Treasury opted instead for the “suitcase approach,” where large sums of cash were delivered to banks (solvent and insolvent alike) with few strings attached. The government needs to restore the banking sector, while protecting the interests of taxpayers. There is no substitute for the P-word.
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Paper provided by University of Maryland, Department of Economics - Peter Cramton in its series Papers of Peter Cramton with number
09fop.
Length: 3 pages Date of creation: 2009 Date of revision:
2009 Publication status: Published in The Economists' Voice, 6:2, www.bepress.com/ev/vol6/iss2/art2, February 2009 Handle: RePEc:pcc:pccumd:09fop
Contact details of provider: Postal: Economics Department, University of Maryland, College Park, MD 20742-7211 Phone: (202) 318-0520 Fax: (202) 318-0520 Web page: http://www.cramton.umd.edu
For technical questions regarding this item, or to correct its listing, contact: (Peter Cramton).