Comments on: Reverting to TARP http://www.ritholtz.com/blog/2009/01/reverting-to-tarp/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Tue, 14 Feb 2012 16:09:43 +0000 hourly 1 http://wordpress.org/?v=3.0.5 By: Peter Davies http://www.ritholtz.com/blog/2009/01/reverting-to-tarp/comment-page-1/#comment-141520 Peter Davies Sun, 25 Jan 2009 13:18:43 +0000 http://www.ritholtz.com/blog/?p=17098#comment-141520 The problem with outright nationalization is that reprivatization can be a long and expensive process, often taking many years. This was the experience in the UK during the Thatcher years. For this reason, partial privatization is a better option. The entity remains listed and must comply with all the statutory requirements for a listed entity regarding disclosure, etc. Anthony Fry of Evercore Partners cogently makes this case. He frequently guests hosts on CNBC's Squawkbox Europe and was heavily involved in the Thatcher era privatizations The problem with outright nationalization is that reprivatization can be a long and expensive process, often taking many years. This was the experience in the UK during the Thatcher years. For this reason, partial privatization is a better option. The entity remains listed and must comply with all the statutory requirements for a listed entity regarding disclosure, etc. Anthony Fry of Evercore Partners cogently makes this case. He frequently guests hosts on CNBC’s Squawkbox Europe and was heavily involved in the Thatcher era privatizations

]]> By: Chris Whalen http://www.ritholtz.com/blog/2009/01/reverting-to-tarp/comment-page-1/#comment-141491 Chris Whalen Sat, 24 Jan 2009 23:24:33 +0000 http://www.ritholtz.com/blog/?p=17098#comment-141491 Nocera and everyone else fail to appreciate that if you buy the paper at par, the taxpayer eats the loss and owns the bank as the quid pro quo. If we pay market, the bank takes a loss and becomes less solvent, and we end up owning the bank. Better to just let Sheila do her job, resolve the bank and sell to new investors. That in blunt terms is the solutions, but nobody in DC at the Fed and Treasury wants to risk another Lehman. The lack here is guts, not money. We can resolve Citi over a period of years and keep the loss rate for the FDIC minimized. But I am still expecting 2-3x RBC in terms of losses at C, so how do we not haircut the debt? This is why the Geithner nomination was not about taxes but whether the big banks continue to free ride on the rest of the industry and ultimate the taxpayer. Nocera and everyone else fail to appreciate that if you buy the paper at par, the taxpayer eats the loss and owns the bank as the quid pro quo. If we pay market, the bank takes a loss and becomes less solvent, and we end up owning the bank. Better to just let Sheila do her job, resolve the bank and sell to new investors. That in blunt terms is the solutions, but nobody in DC at the Fed and Treasury wants to risk another Lehman. The lack here is guts, not money. We can resolve Citi over a period of years and keep the loss rate for the FDIC minimized. But I am still expecting 2-3x RBC in terms of losses at C, so how do we not haircut the debt? This is why the Geithner nomination was not about taxes but whether the big banks continue to free ride on the rest of the industry and ultimate the taxpayer.

]]> By: mark http://www.ritholtz.com/blog/2009/01/reverting-to-tarp/comment-page-1/#comment-141479 mark Sat, 24 Jan 2009 21:47:25 +0000 http://www.ritholtz.com/blog/?p=17098#comment-141479 I guess Nocera's argument was too implicit for me. I was left wondering if Nocera reads his own newspaper. The Times employs a Nobel Prize winning economist who has forcefully written about the problems with both TARP 1.0 and TARP 2.0beta. Nocera should at least have had a quote from him. Paul Kasriel has a piece out on why one cannot apply the Swedish model to the current model. His reasons apply equally well to why one cannot simply apply the RTC model, i.e., this time it's global. No single country can fix this. It will require coordinated international agreements and actions on the part of all the major players, most especially the US and China. Since at least some of these actions would be perceived domestically in each country as not necessarily in the short term national interest I'm not holding my breath. I guess Nocera’s argument was too implicit for me. I was left wondering if Nocera reads his own newspaper. The Times employs a Nobel Prize winning economist who has forcefully written about the problems with both TARP 1.0 and TARP 2.0beta. Nocera should at least have had a quote from him.

Paul Kasriel has a piece out on why one cannot apply the Swedish model to the current model. His reasons apply equally well to why one cannot simply apply the RTC model, i.e., this time it’s global. No single country can fix this. It will require coordinated international agreements and actions on the part of all the major players, most especially the US and China. Since at least some of these actions would be perceived domestically in each country as not necessarily in the short term national interest I’m not holding my breath.

]]>