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Stiglitz Criticizes Bad Bank Plan as Swapping ‘Cash for Trash’

Posted By admin On February 1, 2009 @ 5:08 am In Money Watch | Comments Disabled

Simon Kennedy
Bloomberg [1]
Sunday, Feb 1, 2009

Nobel laureate Joseph Stiglitz said any decision by President Barack Obama to establish a so-called bad bank to rid financial companies of toxic assets risks swelling the national debt.

Obama’s administration is moving closer to buying the illiquid assets currently clogging bank’s balance sheets and preventing them from boosting lending, people familiar with the matter said this week.

That amounts to swapping taxpayers’ “cash for trash,” Stiglitz said yesterday in a panel discussion at the World Economic Forum in Davos, Switzerland. “You shouldn’t chase good money after bad. We’re talking about a national debt that’s very hard to manage.”


Stiglitz Criticizes Bad Bank Plan as Swapping ‘Cash for Trash’ 335x205 graph128c aj [2]

Stiglitz, a professor at Columbia University in New York and a former adviser to President Bill Clinton, says the plan would leave taxpayers paying for years of excess lending by banks. It would also deprive the government of money that would have been better spent shoring up Social Security, he said.

Whether a bad bank would accelerate an end to the financial crisis split delegates attending the Davos talks. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said such an operation would help if “executed well.” Billionaire investor George Soros said in an interview that “it’s not the measure that would turn the situation around and enable banks to lend.”

Full article here [1]

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URLs in this post:

[1] Bloomberg: http://www.washingtonpost.com/wp-dyn/content/article/2009/01/31/AR2009013101548.html?nav=hcmodule&sub=AR

[2] Image: http://www.efoodsdirect.com/products.html

[3] Stiglitz: Bank Plan Makes Taxpayers Suckers: http://www.prisonplanet.com/stiglitz-bank-plan-makes-taxpayers-suckers.html

[4] Geithner Plan Will Rob US Taxpayers: Stiglitz: http://www.prisonplanet.com/geithner-plan-will-rob-us-taxpayers-stiglitz.html

[5] Nobel Laureate Dr. Joseph Stiglitz Says “The Geithner Plan Amounts To Robbery Of The American People”: http://www.prisonplanet.com/nobel-laureate-dr-joseph-stiglitz-says-the-geithner-plan-amounts-to-robbery-of-the-american-people.html

[6] Banks Keep Mum on What they Did with Bailout Cash: http://www.prisonplanet.com/banks-keep-mum-on-what-they-did-with-bailout-cash.html

[7] Stiglitz Says Banking Problems Are Now Bigger Than Pre-Lehman: http://www.prisonplanet.com/stiglitz-says-banking-problems-are-now-bigger-than-pre-lehman.html

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