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No Substitute for the 'P'-Word in Financial Rescue

Lawrence M. Ausubel () and Peter Cramton ()
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Lawrence M. Ausubel: Economics Department, University of Maryland, http://www.econ.umd.edu

Papers of Peter Cramton from University of Maryland, Department of Economics - Peter Cramton

Abstract: Three months and three-hundred billion dollars of bank rescue efforts have gotten bogged down in a widespread and irrational fear among policymakers: the fear of trying to put a price on banks’ troubled assets. So profound is this fear that the Bush Treasury opted instead for the “suitcase approach,” where large sums of cash were delivered to banks (solvent and insolvent alike) with few strings attached. The government needs to restore the banking sector, while protecting the interests of taxpayers. There is no substitute for the P-word.

Keywords: Auctions; financial auctions; financial crisis (search for similar items in EconPapers)
JEL-codes: D44 G01 G21 (search for similar items in EconPapers)
Pages: 3 pages
Date: 2009, Revised 2009
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Published in The Economists' Voice, 6:2, www.bepress.com/ev/vol6/iss2/art2, February 2009

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