Commentaries

The Road to Recovery Hits Financial Triage Detour

by ahughey

The Road to Recovery Hits Financial Triage Detour

February 6, 2009

A recent Washington Post article reported that the Obama administration is considering another bank rescue to buy out troubled assets in order to limit bank losses by stabilizing asset prices. This amounts to what the writers have termed "financial triage"; that is, a government decision on which assets the banks will keep and which the government will take responsibility for. This essentially creates a "bad bank" controlled by the U.S. government to house the toxic assets. The article also reports on Obama's decision to cap executive pay at $500,000 for companies who accept "massive government assistance."

Read the full article here.

Meanwhile, Yves Smith, the Naked Capitalist, writes a response detailing the effects of this second bank bailout here. It's worth the read for some sobering clarification.

Posted: Feb 06, 2009 | Research Topic: Research Topics