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Alen Greenspan Suggests to form a A-Team

Discussion in 'Politics & Religion' started by tilak83in, Sep 1, 2008.

  1. #1
    Hire the A-Team
    Aug 7th 2008 | WASHINGTON, DC
    From The Economist print edition
    "The former Fed chairman calls for a new way to deal with a crisis
    A LIFELONG libertarian, Alan Greenspan does not ordinarily advocate
    giving the government more power. But he does so in a new epilogue to
    the paperback edition of his memoir, parts of which were made available to
    The Economist. The crisis of the past year has convinced him it is the
    lesser evil. Better someone else be in charge of bail-outs, he argues, than
    the Federal Reserve, which he led for 18 years.
    Mr Greenspan says a high-level panel of American financial officials should
    be given broad power to seize any financial institution whose failure
    threatens the entire economy, bail out its creditors and close it down. “We
    need laws that specify and limit the conditions for bail-outs” and do so
    transparently with taxpayers’ money, “rather than circuitously through the
    central bank, as was done during the blow-up of Bear Stearns,” he writes
    in “The Age of Turbulence”. (Penguin is to release the paperback on
    September 9th.)
    If that means the government has to wade in, so be it. “Our country has
    long since abandoned the notion that we should leave crises to be resolved
    solely by the marketplace,” he says. “The critical need…is to formalise…the procedures improvised in the
    case of Bear Stearns. This should ensure that in the future, government financial assistance to lending
    institutions does not impact the Federal Reserve’s balance-sheet and monetary policy.”
    He says a standby panel, empowered by Congress, should determine if an institution’s failure is dangerous
    enough to require taxpayer support. It would then form a vehicle to take the firm into “conservatorship”,
    wipe out the equity, preferably impose a “haircut” on its debts before guaranteeing them, and then sell its
    assets. Mr Greenspan’s model is the Resolution Trust Corporation (on whose board he served), created in
    1989 to take over failing thrifts, sell their assets, then close itself down. He pours cold water on a proposal
    by Hank Paulson, America’s treasury secretary, to give the Fed broad responsibility over market stability.
    Mr Greenspan’s proposal may be politically difficult. For years Fannie Mae and Freddie Mac, America’s
    mortgage giants, resisted the creation of a regulator that could close them down. With other large
    institutions—be they investment banks, hedge funds or insurance companies—there might be even more
    of a fuss. And the Fed is not yet ready to bow out. “Unless I hear from Congress that I should not be
    responding to a crisis situation, I think that it’s a long-standing role of the central bank to use its lenderof-
    last-resort facilities,” Ben Bernanke, Mr Greenspan’s successor at the Fed, said last month."

    I don't see US is looking up to Greenspan for any more suggestions....
    tilak83in, Sep 1, 2008 IP
  2. gauharjk

    gauharjk Well-Known Member

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    Alan Greenspan = Libertarian?? LOL... :p

    Awesome... So, he wants the tax payers to pay for the mistakes of greedy corporations? Why? If the creditors and investors had made profits, would they share it with the tax-payers? If not, then by what right these people can lay claim to tax-payer money? Socializing losses? UNFAIR!
    gauharjk, Sep 1, 2008 IP