Link to Roubini's very thoughtful analysis below sheds a glaring light on the dismal lack of intellect in the US senate and congress, a clear reflection of the sorry state of American electorate.
Barney Frank' conversation on the floor on clarifying that the bill allows (despite dubious language) for using the 700B in injecting direct pubic capital in banks as preferred shares etc. saves the day.
Paulson is now recommending, a 180 degree turn from what he proposed and what congress and senate approved, buying toxic assets at inflated prices essentially throwing tax payers money away TO NOW "nationalizing banks", exactly what UK did yesterday . A correct step in solving the financial turmoil while protecting tax payers. In addition, treasury should inject equity only in solvent but illiquid institutions and let the insolvent banks go!
Obama made strong argument for taking equity stakes in banks and essentially set the stage for this crucial interpretation of the bill!
It is ironic and extremely sad that it takes a financial catastrophe for an intellectual man to be competitive in an election.
Link to Roubini's analysis is below
http://www.rgemonitor.com/...
Barney Frank's conversation with Jim Moran of Virginia.
Mr. MORAN of Virginia. Thank you, Madam Speaker. I won't take that much time. I do want to thank the chairman for his masterful leadership on this bill, and I do want to clarify that the intent of this legislation is to authorize the Treasury Department to strengthen credit markets by infusing capital into weak institutions in two ways: By buying their stock, debt, or other capital instruments; and, two, by purchasing bad assets from the institutions, in coordination with existing regulatory agencies and their responsibilities under this legislation, as well as under already existing authorization for prompt, corrective action and leastcost resolution.
Mr. FRANK of Massachusetts. Will the gentleman yield?
Mr. MORAN of Virginia. I'd be happy to yield.
Mr. FRANK of Massachusetts. I can affirm that. As the gentleman knows, the Treasury Department is in agreement with this, and we should be clear, this is one of the things that this House and the Senate added to the bill, the authority to buy equity. It is not simply buying up the assets, it is to buy equity, and to buy equity in a way that the Federal Government will able to benefit if there is an appreciation.