As I reported yesterday, WSJ's Alan Murray asked Geithner this question:
Murray asked Geithner right out of the gate if Geithner thought banks would be willing to sell assets that weren't completely marked down. Geithner danced around the question, but on further Murray probing signalled that the Treasury was willing to pump more money into any bank that needed further capital--including if it is a result of liquidating assets via the Treasury plan. I took this to me that the Treasury is protecting all major banks, currently standing, from failure.
That was yesterday.
Today, some of the FFI participants went over to the White House to get an off the record briefing from Director of the White House's National Economic Council, Larry Summers. Two of the attendees told me that at the briefing Summers was asked the same question and completely dodge it.
Which means the administration still is far from having their act together. You would think that Geithner would tell one of his assistants to put together a list of the most likely questions that will be asked about the plan, and then go over with Summers and Bernanke a common response to the questions.
"Will a serious hole in bank capital, as a result of markdowns, be filled?", would have been at the top of the list. The fact that Summers dodged it, and Geithner attempted to, suggests that there was not proper preparation for the release of the plan.
Now the question comes up, did Geithner really mean what he said when he said that all banks would be kept whole. Or did he simply answer the question that way because of the aggressive questioning by Murray and not because he had thought about the question in detail. Summers, ducking the question, suggests that they don't have a plan for the problem raised by the question and perhaps have not even thought about the problem. Scary.
No comments:
Post a Comment