Word: geithner
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From his earliest days as Treasury Secretary, Tim Geithner's biggest challenge has been restoring confidence in America's fragile banks without taking the politically costly step of asking Congress for more money. To judge by the results of the government-run stress tests released Thursday afternoon, Geithner has somehow pulled it off - at least...
...Facts are important too, and some think Geithner and the government are fudging them. Nouriel Roubini, the hard-headed pessimist who foresaw the financial crisis, wrote Tuesday in the Wall Street Journal that the overall positive message of the stress tests "would be good news if it were credible," but it's not. He points to the recent IMF report that estimated $2.7 trillion in U.S. loan and security losses, and his own estimate of $3.6 trillion for the same potential losses. "The financial system is currently near insolvency," he concluded. Bernanke disputes the numbers, saying banks have "taken significant...
...remarkable bit of salesmanship, Geithner has managed to package those findings as positive. Most of the banks can meet or beat the newly imposed government capital requirements on their own, either by selling off parts of their business, converting loans into stock or participating in the fledgling government-led effort to get toxic assets off their balance sheets. And those that are short on cash won't need more in total than the $110 billion to $135 billion the Treasury still has from the original $700 billion in TARP funds that Congress gave the Bush Administration for bank rescues last...
...three months after he rolled out his bank-rescue plan to disastrous reviews, Geithner, with help from Ben Bernanke and others, has bolstered the confidence of the banks, Congress, the stock market and much of the country. In an economy that runs on credit, that's half the battle. (See pictures of the dangers of printing money...
...Still, even if the numbers are based more on positive thinking than cold hard facts, it's tough not to be impressed by what Geithner and company have accomplished. In addition to the boost in public confidence, they've apparently figured out how to get the banks to support Geithner's other iffy program, the one designed to rid banks of toxic assets. Until now, banks have resisted selling the highly securitized, largely illiquid toxic assets, arguing they're worth more than the current fire-sale prices being offered on the open market. But taking them off the banks' books...