Nobel economics laureate Joseph Stiglitz has been one of the most vocal critics of the Bush/Obama bailout strategy from the start, and this morning Bloomberg is featuring an interview in which Stiglitz says flatly that Team Obama is in effect working for the banks and not the American public.
The Troubled Asset Relief Program, or TARP, isn’t large enough to recapitalize the banking system, and the administration hasn’t been direct in addressing that shortfall, he said. Stiglitz said there are conflicts of interest at the White House because some of Obama’s advisers have close ties to Wall Street.
“We don’t have enough money, they don’t want to go back to Congress, and they don’t want to do it in an open way and they don’t want to get control” of the banks, a set of constraints that will guarantee failure, Stiglitz said.
The return to taxpayers from the TARP is as low as 25 cents on the dollar, he said. “The bank restructuring has been an absolute mess.”
Rather than continually buying small stakes in banks, weaker banks should be put through a receivership where the shareholders of the banks are wiped out and the bondholders become the shareholders, using taxpayer money to keep the institutions functioning, he said.
In conclusion, says Stiglitz–echoing remarks by author Kevin Phillips, whose MinnPost interview I’ll be posting here Monday–“”This is a strategy trying to recreate that bubble. That’s not likely to provide a long run solution. It’s a solution that says let’s kick the can down the road a little bit.”
Elsewhere: The NYT’s Opinionator blog surveys reactions to Texas Gov. Rick Perry’s secession talk; RealtyTrac reported that March housing foreclosures were up 17 percent over the previous month and 46 percent over the previous year; and Russian policy analyst Igor Panarin, who got some domestic media attention back in December for his prediction that the U.S. will ultimately break up as the Soviet Union did, is comparing Barack Obama to Mikhail Gorbachev.