On Fri, Jan 23, 2009 at 3:24 AM, Julio Huato <[email protected]> wrote: > IIRC, Sabri here has made a similar argument. Are shadow banks banks > in that sense or not? I think that to the extent they are (and they > are to some extent), short of more effective and equitable measures, > the public-interest argument for propping them up stands. Again, > propping up banks doesn't mean to reward the bankers. As I said in my > reply to Shane Mage, there's no disagreement on that.
I don't think there is a major disagreement here, but I think in this context it is more useful to make a distinction between direct and indirect TARP beneficiaries rather than regular and shadow banks. These categories are roughly similar but not identical. When the TARP bailout to an institution is direct (in the form of equity injection or asset guarantees), the Treasury at least has some lever to pressure the institution, whether regular (Citi) or shadow bank Goldman Sachs), to keep lending. When the bailout is indirect, e.g. to PIMCO or BlackRock on GMAC bonds, the Treasury has no lever whatsoever to pressure the institution to act in the public interest. Thus PIMCO continues its utterly anti-social policy of pursuing profit in "bailout-arbitrage" quite openly. -raghu. -- Did you hear about the dyslexic Satanist? He sold his soul to Santa. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
