Tuesday, February 10, 2009

Geithner-Obama's Bank Rescue Plan to Finance Shadow Banking System

Treasury Chief Tim Geithner dropped an egg on stock markets with his broad policy announcement. The market expected specifics. They plummeted.

Tim stressed Uncle Sam would loan to private firms and guarantee their returns. Would the loans occur at below market rates? What level of returns is guaranteed for private firms accessing cheap debt, 10%, 15%?

Six months ago, private equity and hedge funds couldn't own banks. Today they can. The Carlyle Group is considering a bid on BankUnited, a Florida bank.

In Senate testimony, Geithner said financial markets are complex and fragile. Guess what he wants to restart ASAP? Securitization, a complex and fragile investment vehicle. More hair of the dog tonic for badly hungover Wall Street.

Public-private partnerships sounds like more corporafornication. Pppppffttt!