Seriously. Per the NYTimes:
Mr. Geithner largely prevailed in opposing tougher conditions on financial institutions that were sought by presidential aides, including David Axelrod, a senior adviser to the president, according to administration and Congressional officials.
Mr. Geithner, who will announce the broad outlines of the plan on Tuesday, successfully fought against more severe limits on executive pay for companies receiving government aid.
He resisted those who wanted to dictate how banks would spend their rescue money. And he prevailed over top administration aides who wanted to replace bank executives and wipe out shareholders at institutions receiving aid.
In other words, taxpayer money will be used to prop up banks. The same executives who caused the problems will be allowed to continue paying themselves huge bonuses for destroying the economy and bankrupting their banks and they won’t be forced to use the money to lend to actual consumers. Nor will shareholders be replaced so that taxpayers investing hundreds of billions and taking on trillions in risk can have all the upside instead of all the upside (yes, they’ll probably get some shares. They should get 100% ownership. You should get 100% ownership. It’s your money Geithner’s spending).
This is the real nub:
It intends to call for the creation of a joint Treasury and Federal Reserve program, at an initial cost of $250 billion to $500 billion, to encourage investors to acquire soured mortgage-related assets from banks.
If private investors wanted to buy such assets, they already could. They don’t, because the prices they want to offer are lower than the prices banks are willing to accept. This cannot work unless Geithner either subsidizes them or guarantees their losses. My bet is that he will in fact guarantee any losses, calling it "insurance". They will leverage up the 250 to 500 billion and use it to insure losses from private investors who buy up the toxic waste. If it goes bad (and it will), you, the taxpayer, won’t be on the hook for 250 to 500 billion, you’ll be on the hook for however much goes bad. And the amount will be in the trillions.
Trillions of dollars will be taken off the banks books with all the risk on taxpayers. And in exchange they will not have to give up their huge salaries or their huge bonuses, the shareholders won’t be wiped out, the creditors won’t take a bath. None of that. The only person who’ll take a bath if it goes all wrong is you – the American taxpayer.