Treasury Changes the Rules of the Game

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Apr 6 2009, 5:32 pm by Conor Clarke

It's hard to know what to make of the fact that the Treasury Department is extending the application deadline and "refining" the guidelines for the Legacy Securities Public-Private Investment Program. On the one hand, expanding the pool of eligible applicants might temper some of the fairness-based criticisms that the plan has received. (I.E. -- why can only the big players get non-recourse loans?) On the other hand, extending the application deadline is something you do when the first round of applicants is a bit weak.

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» PPIP gaming in a nutshell from Interfluidity

Divide the world into the consolidated financial sector and taxpayers. Under PPIP, each dollar a "public-private investment fund" overbids provokes a net transfer of anywhere from $1 to $13 to the financial sector from taxpayers. The size of the per...

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Yancey Ward April 6, 2009 9:09 PM

No one outside the banks with the bad assets themselves has much incentive (and much reason to not get involved with the government at this point in time) to participate, but such players are needed for political cover.

Say what you want about Paulson's original intention with TARP, but it was the most honest approach I have seen proposed by anyone at Treasury during the last 7 months. The dishonesty grows by the day.