What If . . .
. . . the Geithner Plan is to finance his Masters of The Universe bailout through a long term tax on banks? Via Krugman and Salmon, Nemo describes how the government subsidies (through non-recourse loans) will artifically inflate the prices for toxic assets but a Nemo commenter envisions how the government could recoup the money:
[C]ouldn’t [the FDIC] just raise the bank tax (or wait since the FDIC historically builds up a reserve over time) until the [government funds] [are] repayed? Sounds like a simple way to effectively have the banks slowly dig themselves out of this problem. . . . The only real downside I see is that it is slightly unfair to banks that are in good shape, since they will have to pay the increase[d] FDIC fee even thought they didn’t participate. . .
More . . .
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