Dennis Snower, 20 May 2009

Under the threat of the financial crisis, US banks have received, without much controversy, huge bailouts. This column argues that the rescue plan ought to act as an automatic stabiliser, providing large bailouts to those institutions whose toxic assets turn out to be worth little and smaller bailouts to those whose toxic assets are worth more. But that is precisely what the Geithner Plan doesn’t do.

Jeffrey Sachs, 25 March 2009

This column explains how the Geithner public-private scheme to buy toxic assets at inflated prices is – in expected value terms – a hidden subsidy to bank shareholders paid for by US taxpayers. If the toxic assets turn out to be good investments, there is no transfer, but if they turn out to be bad loans, the taxpayer is left holding the damage while the private investors walk away.


CEPR Policy Research