I’d been coming around to the view that the PPIP plan, whatever its shortcomings, is really about the best we could do. This business about banks possibly just swapping toxic assets and proclaiming them now valuable, however, is really distressing. As Felix Salmon says:
Looked at this way, the combination of letting banks bid on each others’ toxic assets, along with the weakening of mark-to-market rules, will serve to maximize opacity, minimize the chances that insolvent banks will be revealed as such, and render the government’s stress tests an exercise in rubber-stamping utterly unrealistic balance sheets. The risks of a Japan-style lost decade seem higher than ever.
Meanwhile, this look at Larry Summers’ multi-million dollar income mostly derived from financial firms in exchange for vaguely defined services is once again a reminder that the people running our policy have a level of personal ties to and affinity for the world of big finance that the rest of us lack.