Saturday, January 17, 2009

Saving the Banks

Some ideas for a comprehensive solution for the banking crisis are discussed in this article by Joe Nocera in the NYTimes. An important point is that until we know the extent of the losses in the banking system it will continue to rely on government funding. But banks are reluctant to recognize losses until they know they will be able to survive the shock. One type of solution is then an RTC type bank to buy all the bad assets. Sounds like TARP? But how to determine the value?

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