Rock’s Bottom
By Dean Robinson
Aggregator bank is a Trojan horse
By Hugh Wood
Five Months after US Treasury Sec. Paulson asked for TARP Funds (and at this writing not having used not a dime to buy toxic assets), he now proposes yet another solution – A new US Government Owned “Aggregator Bank.”
While this idea comes not from the RTC but from the Swedish Banking Crisis of 1990-1993, it has the potential to go far afield of its stated purpose.
What is the RTC?
Resolution Trust Company:
A quasi-government organization created by Congress in 1989 to solve the S & L debacle. It replaces the FSLIC (Federal Savings and Loan Insurance Corporation). In 1995 its activities were transferred to the Savings Association Insurance Fund.
Industry: Finance
Definition courtesy of nndb.com
The problem with Geithner’s plan: It will bankrupt the banks
By Henry Blodget
The Business Insider
The big problem with Tim Geithner's plan to fix the banks is the same as it ever was: The gap between what banks say their assets are worth and what the market says they are worth.
When a bank says an asset is worth 60 cents and the market says it's worth 30 cents, someone has to cover that spread. The genius of Geithner's plan is that it pawns most of the cost (and most of the risk) off on the taxpayer without the taxpayer noticing.
