TARP II-A Better Troubled Asset Relief Program
Will Obama focus on building a “better” TARP? One that looks more like the original Paulson plan, zeroing in on setting a price on the seed of the mortgage meltdown–”troubled assets?” Notably a portion of the TARP acronym, but reprioritized immediately out of the gate to a bank recapitalization plan.
The argument being presented by some is that we are still facing the same problem Paulson called an emergency meeting of Congressional leader to warn against and solve for–frozen credit markets:
But some people say the Treasury secretary question pales in comparison to the need to unlock the credit markets, which despite some recent thawing remain largely frozen. Jeff Miller, CEO of NewArc Investments, writes that the biggest threat to the economy stems from the lack of confidence in financial institutions, a mistrust he attributes to the presumption that big banks’ mortgage-related holdings are worthless.
In fact, his theory may be playing out in the equities markets:
While that may overstate the point, it’s has become clear during the markets’ shellacking over the past two days that questions about financial companies’ health are far from settled. Citi has dropped 19% and Bank of America (BAC) 17% since Tuesday’s election-day rally. The only way out of the death spiral, Miller says, is to find a way to match the sellers of troubled assets with private-sector buyers.
Read the rest of Jeff Miller’s open letter to President-elect Obama…
Others, like Takeo Hoshi, hold that we already have a TARP II and the Japanese example of the Rapid Recapitalization Act supports that it is the correct path to continue.
Obama’s Biggest Economic Agenda Foes-Democrats?
This is a great analysis of who may present the greatest opposition to the Obama economic plan–Congressional Democrats.
The Wall Street Journal does a great job of digging in to how politics really works and how agendas formulate for success of failure. This is a great review of the Democrat “feudal lords” that may try to sidetrack the Obama agenda into a myriad of other personal agendas.
Battling the Economic Cerberus-Financial Crisis, Mortgages and Foreclosures, Recession
As President-elect Obama heads to the White House he will find it guarded by the mythical three-head dog, Cerberus, that guards the gates of Hades.
Mr Obama confronts three distinct though related challenges: the financial crisis, mortgages and foreclosures, and recession. Of these, the financial mess has to be dealt with first. “Problems in the financial system”, explains Douglas Elmendorf, an economist at the Brookings Institution, “evolve in a matter of hours, days and weeks.”
The question is, what ferocious head do you battle first? The real key is most likely the right team and a smooth transition of economic policy and Presidential power:
Because of the extreme fragility of market confidence, the way the presidential transition is handled is crucial. Mr Obama’s preparations have been extensive and George Bush himself has prepared the ground for a smooth handover. The president-elect may name the main members of his economic team within days to reassure investors that the replacement of Mr Paulson will be seamless. Both Lawrence Summers, who held the office under Bill Clinton, and Timothy Geithner, the president of the Federal Reserve Bank of New York, are on the shortlist of candidates to take over. Mr Bush has even been urged to take the unprecedented step of nominating some of his successor’s team. But Stephen Hess, at the Brookings Institution, gives warning that this could force Mr Obama to compromise with the outgoing administration on important decisions.
Obama Takes the Financial Crisis to World Leaders
Obama is already out of the chutes to battle the global financial crisis. Here are the highlights of his initial financial crisis consultations with world leaders.
Scouting the New Obama Team
A must watch page for financial services and mortgage industry folks. The team Obama picks is going to define his success or failure. Unlike the typical incoming President, Obama’s plate is full of crisis and he will not be able to manage any of it successfully without a crack team.
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I am Bill Rice the Managing Editor of MortgageLoan.com. These are my morning notes. If you have comments, feedback, or pointers to something interesting email me or follow me on Twitter.
(photo credit: Jithra )
About Bill Rice