Stiglitz Says White House Ties To Wall Street Doom Bank Rescue

Bloomberg:

April 16 (Bloomberg) -- The Obama administration's plan to fix the U.S. banking system is destined to fail because the programs have been designed to help Wall Street rather than create a viable financial system, Nobel Prize-winning economist Joseph Stiglitz said.

"All the ingredients they have so far are weak, and there are several missing ingredients," Stiglitz said in an interview. The people who designed the plans are "either in the pocket of the banks or they're incompetent."

Read the whole story: Bloomberg

Comments

[platanoman]

Geitner worked with the Fed. He's not a wallstreet guy. It's funny how some from the left labels him a wallstreet guy, and people on the right label him a bureaucrat.

[freshnotbitter]

It is worthwhile to read the whole article above because it gives a great recap of the whole mess with a running criticism that can't be beat.

[Pilate]

None of these economists, Nobel winners or not, know for a fact that anything they propose will work, or that what the Obama administration is doing won't work. We've never been here before. Also, the "Science" of Economics barely rises above voodoo status, which is partly why it's so much fun to discuss, especially when it intersects politics.

Obama has a plan and a pace at which he wants to run this. I know he's smarter than all of us on this thread combined. He's probably just as good an economist as Krugman or Stiglitz, and a much better tactician. He will adjust to economy as time goes by when he sees what works and what doesn't. Considering all his successes to this point, I'm willing to let this play out a little longer. When does his hundredth day arrive again?

[freshnotbitter]

Obama inherited a bad situation and came into office with a high level of trust and goodwill from the American people. Under the circumstances his program todate has been disappointing because it just focuses on saving his advisors' Wall St buddies by lending them limitless taxpayers' funds without restructuring the system because it might mean that Wall St tycoons would lose money in the process.

Obama is too fearful of Wall St. He should fear the people more. They will get around to examining what he has done and then it will be too late to set things right.

[mat3]

Even Jethro Bodine knows this.

[avraamjack]

.

It must be a terrible thing to have multiple Nobel Prize winning economists viciously raining on your economic policy.
.

[Wiseronenow]

If we dug ourselves out of 8 years of Bush, we will dig ourselves out of this financial mess.

[billyfitz]

Bush allowed his buddies in the energy and defense businesses steal from us. Now - as much as I hate to admit it - it seems Obama is allowing his buddies on Wall Street to rob us even more.

I can't begin to express how disappointed I am.

[leftLibertarian]

Joe Stiglitz is right:
The Obama administration’s bank- rescue efforts will probably fail because the programs have been designed to help Wall Street rather than create a viable financial system, Nobel Prize-winning economist Joseph Stiglitz said.

“All the ingredients they have so far are weak, and there are several missing ingredients,” Stiglitz said in an interview yesterday. The people who designed the plans are “either in the pocket of the banks or they’re incompeten­t.”

The Troubled Asset Relief Program, or TARP, isn’t large enough to recapitalize the banking system, and the administration hasn’t been direct in addressing that shortfall, he said. Stiglitz said there are conflicts of interest at the White House because some of Obama’s advisers have close ties to Wall Street.

“We don’t have enough money, they don’t want to go back to Congress, and they don’t want to do it in an open way and they don’t want to get control” of the banks, a set of constraints that will guarantee failure, Stiglitz said.

The return to taxpayers from the TARP is as low as 25 cents on the dollar, he said. “The bank restructuring has been an absolute mess.”

Rather than continually buying small stakes in banks, weaker banks should be put through a receivership where the shareholders of the banks are wiped out and the bondholders become the shareholders, using taxpayer money to keep the institutions functioning, he said.”

[TrueSense]

Unfortunately, that somewhat elitess Ralph Nader looks like he was right. Also, we can see the Milton Friedman light in Obama's finance and mortgage rescue plans. Well, the Pres spent time at the U of Chicago.

[Hailmaryyy]

Stiglitz is right. The administration's programs are not reviving lending. Without lending it will take years for the economy to start to recover. I just read the TARP is a failure at reviving lending:

"The problem is that the TARP funds have been distributed to two types of banks: healthy banks and zombie banks. The zombie banks simply want to survive, and they are trimming their loan portfolios and raising interest rates and fees on paying customers wherever they can. However, the healthy banks were basically forced to take the TARP funds for the good of the system....­..Today on a conference call Jamie Dimon, the CEO of J.P. Morgan, declared that his company had the cash to pay the TARP back today and desired to do so as soon as possible. He called the TARP funds a “Scarlett Letter.” Additionally, J.P. Morgan does not plan to participate in the Treasuries new Public-Private Investment Program designed to move troubled assets off the banks balance sheets. This means J.P. Morgan is sitting on the TARP funds and not lending them out."

http://www.escapethenewgreatdepression.com/

How many cars can be sold in America if we only sell new cars to people with excellent credit ratings? There are million of vacant homes for sale. How many homes can we sell if we only give mortgages to people with stellar credit ratings?

Washington needs to wake-up and come up with real solutions to the credit crunch.

[StephenJK]

On the raising of interest rates on existing customers. Everyone with credit cards should zero out their balance, call the issuing bank and inform them that you are no longer giving them your business anymore. It's really that simple. Even if you have a large balance, work on zeroing it out and cancel your credit cards. There is no reason we should be paying these swindlers twice. Enough with the credit card madness. They can do whatever they want with the usury. It should be damned illegal.

[hellboundtrain]

The neutron bomb in the closet is still the unresolved derivatives debacle yet to be played out in the economy.

Why have we not heard more about the fix for this? Is it un-fixable?

[rebound]

He is half right. But he misses the real problem. Too bad. See http://twisri.blogspot.com/2009/03/why-market-failed.html

[watchTVgetSTUPID]

Obama is looking more like McSame. I did not vote for McCain because he was just McSame. I guess we just can't rid ourselves of Bush when it comes to Economic thievery by Wall Street Banksters.

[TrueSense]

I worked to help us have this new President, but he is too much of a compromiser and too much under the spell of Wall Street, but if we are honest, that is what people said about him.

His budgets set better priorities but he fails to be bold when he can and boldness is more effective.

His stimulus plan is misguided.

The mortgage rescue plan sitll means walk away if you are too far underwater. He talks about cheap credit but does not realize the monetary polices his team & the are Fed pushing cheap credit.

He is disappointing on the 4th Amendment. I hope the Repubs enjoy be trakcked with no checks.

He is playing a game with names in terms of combat brigades in Iraq.

He is getting ready to fold on Mexican trucks rather than getting tough. I think Mexico has more to loose.

He can influence trade and use vat. While he is better than what we had, he is not willing to change the fundementals. I will love my Chinese solar panels( a living wage in China ain't cra.. )and Spanish windmills that will revive our economy. China is playing to win and Europe will not fully sign on for a trade suicide pack but demands that we continue ours if it hurts them in the slightest.

I pray he realizes that his policies with the banks look more like those for Japan and other finance stuff looks like Russia's.

Please wake up !

[TJCole]

"Don't let the devil ride Mr. President, if you let him ride, he'll wanna drive..!"

Stiglitz is only stating what is obvious to those of us who know the real Wall St. mentality and arrogance and sense of entitlemen­t....

[watchTVgetSTUPID]

Bill Moyers explains it in this Transcript
Read it if you dare
http://www.pbs.org/moyers/journal/04032009/transcript3.html

[parrotista]

William Black is the flavor of the month I guess. Every article on the banking crisis has a dozen links to the Moyers interview. They're both great guys but as I've pointed out before, Mr. Black is looking at the issue from a very narrow angle - the one of a regulator and a prosecutor. He's looking for bad guys. That was his job. He did it well. But systemic risk means nothing to him. Lehman Brothers means nothing to him. And he doesn't seem to realize the Federal Government doesn't have FDIC-like powers over bank holding companies like Citigroup. (I hope I got that terminology correct regarding Citi... I'm no expert)

- Craig

[000Jade000]

Article on Geithner's #1 that the MSM didn't pick up on:

http://www.motherjones.com/politics/2009/03/geithner-aide-fought-ceo-pay-reform

Time to clean house, President Obama!

[AN2009]

Thanks for the article!