Should taxpayers own the good banks?

Peter Lee
Published on:

While many investors in bank stocks and bonds might have been hoping for a more comprehensive bailout plan from US Treasury secretary Timothy Geithner, others will be pleased with his feeble announcement. Their argument is that the sooner insolvent banks collapse, the sooner the system will be restored to health and confidence return. The notion of the government funding a bad bank to buy troubled assets at above market value – God forbid at face value – is the ultimate moral hazard.