Many reactions to the plan that Secretary Tim Geithner announced today have been negative, both from the left and the right. Paul Krugman is one, and he makes some good points.But the proposal has its defenders. One is Brad DeLong, who also makes some good points. The Geithner Plan is an improvement over the Paulson plan in that, when ”toxic assets,” now called “legacy assets,” are bought from the banks, their prices are set by private bidding (from hedge funds and private equity companies), rather than by an overworked Treasury official pulling a number out of the air and risking that the taxpayer grossly overpays for the assets. It is true that we might end up with some form of temporary bank nationalization before we are done, but Alan Blinder has pointed out some neglected counter-arguments to that course of action.My basic feeling is: let’s give the plan a chance. I debated it on NPR’s On Point this morning.
Originally published at Jeff Frankel’s Weblog and reproduced here with the author’s permission.