Stiglitz hammers Obama admin: White House Ties to Wall Street Doom Bank Rescue

[Karmadillo]

This is very strong stuff. It would be interesting if the Obama administration would respond to Stiglitz's criticisms. Would play well with the Team of Rivals and Transparency concepts talked of for a brief period earlier this year.

http://www.bloomberg.com/apps/news?pid=20601087&sid=afYsmJyngAXQ&refer=home

Stiglitz Says White House Ties to Wall Street Doom Bank Rescue
By Michael McKee and Matthew Benjamin

April 17 (Bloomberg) -- The Obama administration’s bank- rescue efforts will probably fail because the programs have been designed to help Wall Street rather than create a viable financial system, Nobel Prize-winning economist Joseph Stiglitz said.

“All the ingredients they have so far are weak, and there are several missing ingredients,” Stiglitz said in an interview yesterday. The people who designed the plans are “either in the pocket of the banks or they’re incompetent.”

The Troubled Asset Relief Program, or TARP, isn’t large enough to recapitalize the banking system, and the administration hasn’t been direct in addressing that shortfall, he said. Stiglitz said there are conflicts of interest at the White House because some of Obama’s advisers have close ties to Wall Street.

“We don’t have enough money, they don’t want to go back to Congress, and they don’t want to do it in an open way and they don’t want to get control” of the banks, a set of constraints that will guarantee failure, Stiglitz said.

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You’re really bailing out the shareholders and the bondholders,” he said. “Some of the people likely to be involved in this, like Pimco, are big bondholders,” he said, referring to Pacific Investment Management Co., a bond investment firm in Newport Beach, California.

Stiglitz said taxpayer losses are likely to be much larger than bank profits from the PPIP program even though Federal Deposit Insurance Corp. Chairman Sheila Bair has said the agency expects no losses.

“The statement from Sheila Bair that there’s no risk is absurd,” he said, because losses from the PPIP will be borne by the FDIC, which is funded by member banks.

more...

[slipslidingaway]

1. K&R Elizabeth Warren discusses PPIP with Jon Stewart...

unfortunately they went to commercial and the conversation changed. Also her interview on Morning Joe on the stress tests is worth watching IMO.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=5467207&mesg_id=5467207