BUSINESS
04/15/2009 05:12 am ET | Updated May 25, 2011

Paul O'Neill, Fareed Zakaria Interview About Financial Crisis, Bailouts (VIDEO)

Former Treasury Secretary Paul O'Neill was a guest on Fareed Zakaria's CNN show, "GPS," to discuss the current financial crisis and the bailouts so far of several major US companies. O'Neill addressed one of the biggest problems plaguing the financial sector: the inability of the government, and the companies themselves, to evaluate fully the extent to which their balance sheets are clogged with toxic assets. O'Neill offered this suggestion:

I would order the 19 major financial institutions to put on the internet the classifications of their assets by investment grade rating... And for those parts of their asset holdings that can't be rated investment grade or in fact as they say can't be valued or can't be fairly valued, I would create a new device which I call a "quarantine account." One could make a judgment about the value of these institutions and the institutions could make a self-judgment about how much more lending capacity they have if the quarantined assets are set aside.

AIG and others have repeatedly been bailed out only to come back for more money because their losses ended up being more than they either admitted to or realized. As O'Neill puts it, "if you can't value the assets, please don't buy them with my money."