The Fed has jurisdiction over bank holding companies.

The NY Fed put out a chart outlining the various authorities.  It's on-line.

From recollection, I believe he has been in academics his whole life, except for a year or so in the Reagan White House or administration. He also served on an Enron advisory board.

I'm sure he's very educated and smart. However, my view is that he lets his politics overwhelm his views on the financial crisis, banks and business.

"Perhaps the concept of negotiating with counterparties is beyond your abilities."

Instead of responding to what I wrote you instead introduce something that does not directly address what I wrote as if it makes what I wrote incorrect. It doesn't.

As for your market value - I'd like to see you describe just what the market value of those assets are. It would be impossible for you to do that but you throw the term around as if it means something.

One of the arguments to pay book value is that if you don't then you severely reduce the net worth of the banks. Now many will say 'so what?'. Well if the banks are not worth what they are currently carrying on their financial statements it means that their credit worthiness and thus their ability to borrow so they can lend is hampered. And as a result so is economic recovery.

So we have a two edged sword. If the banks get book value the populist cry is that they are getting too much. If they don't get book value then the population suffers because the recovery will take longer due to the banks inability to borrow sooner, thereby lend sooner - both critical to the recovery of the economy.

So if you are willing to prolong the recovery so that banks don't profit from getting book value then that is the price you will pay for you not wanting the banks to profit. So again in not wanting them to profit you in turn impede yours and others ability to profit and prosper. And by allowing them to get book value and profit you are likely going to profit and prosper and a faster rate.

So the question is how much are you willing to pay so they don't profit?

And in addition the longer they don't profit the longer your tax dollars will go to prop them up until they do.

This is not a simple problem with simple solutions as some try to make it out to be.

1. "the Treasury will hire four or five investment management firms, matching the private money that each of the firms puts up on a dollar-for-dollar basis with government money."

This looks like the risk and reward would be shared 50-50 between private investors and the Treasury.

2. "the Federal Deposit Insurance Corporation will set up special-purpose investment partnerships and lend about 85 percent of the money"

"The remaining 15 percent will come from the government and the private investors. The Treasury would put up as much as 80 percent of that, while private investors would put up as little as 20 percent of the money, according to industry officials. Private investors, then, would be contributing as little as 3 percent of the equity, and the government as much as 97 percent."

Note that this doesn't mean that the private investors would put up only 20% of the equity (or 3% of the total money). That's just the minimum they would have to invest. It looks to me like the private investors could put up all of the 15% equity. This would presumably be an agreement between the private investors and the FDIC.

If the FDIC puts up some of the equity, then the FDIC would have "upside".

The loan would be non-recourse to the partnership and would carry a low interest rate. Non-recourse means that the lender would have recourse only to the assets purchased and not to the partnership--in terms of repayment of the loan.

Normally/often in partnerships like this, the equity partners would not receive any distributions until the loan is repaid. Sometimes the managing partners would receive a management fee. No management fee was mentioned in the NY Times article.