Op-Ed Columnist - Showing Some Discipline - NYTimes.com
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Some economists leave the impression that the banking sector is a rotting corpse, hopelessly polluted by valueless toxic assets. Geithner takes a different view. He agrees that many bankers did things that are “reprehensible and deeply troubling.” But the big uncertainty is not inside the banks; it’s in the broader economic climate.
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Therefore, Geithner argues, the government doesn’t need to go in and nationalize the banks. “It’s very important that we don’t look like there’s any intent of taking over or managing banks. Governments are terrible managers of bad assets. There’s no good history of governments doing that well.”
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The key, he says, is to create “massive, sustained and substantial macroeconomic policy” that would pump capital into markets to get them working again. The heart of his program is a series of public-private investment funds with names like the Legacy Asset Partnership Bank and the Consumer and Business Lending Initiative. One would acquire toxic assets. One would foster consumer and small-business lending. “There’s a lot of private capital out there that wants to come in. It just can’t get the financing,” Geithner insists. The new programs would encourage private investors, and then once the markets are unfrozen, would “get out as quickly as possible.”
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