Redistribution through the Geithner Plan
AbstractAppropriate policies to address the problem of toxic assets should act as automatic stabilizers, so that institutions who toxic assets turn out to be worthless receive more public support than institutions whose toxic assets have value. Furthermore, such policies should be frugal in their demands on the taxpayer. In the context of a simple illustrative toxic asset, the paper shows that the Geithner Plan fulfills neither of these desiderata. The plan is extremely wasteful when banks need only modest bailouts; when they need large bailouts, the plan is ineffective. --
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Bibliographic InfoPaper provided by Kiel Institute for the World Economy (IfW) in its series Open Access Publications from Kiel Institute for the World Economy with number 32968.
Date of creation: 2009
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- Michele Fratianni & Francesco Marchionne, 2009.
"Rescuing Banks from the Effects of the Financial Crisis,"
Mo.Fi.R. Working Papers
30, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
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