Obama TARP Advisors, Incompetent or in Banks’ Pockets: Says Economist Joseph Stiglitz

April 17, 2009

(ChattahBox)—Nobel Prize-winning economist Joseph Stiglitz in an interview with Bloomberg this week, harshly criticized the federal Troubled Asset Relief Program, or TARP as run by incompetent, Wall Street insiders and says it’s doomed to fail. Stiglitz said the Wall Street insiders who are advising Obama, namely Treasury Secretary Timothy Geithner and Economic Council Director Lawrence Summers, have conflicts of interest from their past ties to Wall Street.

Stiglitz points to Geithner’s former position as president of the New York Federal Reserve Bank and Summers’ position as a managing director of a hedge fund, D.E. Shaw & Co where he earned $5 million in salary and bonuses, to support his conflict of interest charges. He says the TARP program was created to enrich Wall Street.

Stiglitz, certainly has the economic credentials to back up his criticism of the TARP program. He is a 2001 winner of the Nobel Prize in Economics, a professor at Columbia University, the former chief economist at the World Bank and he also served in the Clinton administration on the Council of Economic Advisers.

Stiglitz says the TARP program, devised under the Bush administration by Treasury Secretary Henry Paulson and Federal Reserve Board Chairman Ben Bernacke has fatal design flaws, saying the program isn’t big enough to recapitalize the banking system. Stiglitz says the failed banks should be subjected to a receivership where the shareholders of the banks are eliminated and the bondholders become the shareholders.

Harvard Law Professor Elizabeth Warren, head of the TARP Congressional Oversight Panel, said much the same thing as Stiglitz in her recent report, suggesting the Treasury Department seriously consider the liquidation of insolvent banks.

Stiglitz is also highly critical of the Public-Private Investment Program, or PPIP, designed to buy bad assets from banks, saying it only enriches investors while robbing the taxpayers. He claims ultimately, the PPIP program will result in huge taxpayer losses, much larger than bank profits.

Stiglitz also condemned Obama’s $75 billion mortgage relief program, saying it does very little to help those facing foreclosure or revitalize the mortgage industry, referring to it as a program of Japanese-style malaise.


Comments

2 Responses to “Obama TARP Advisors, Incompetent or in Banks’ Pockets: Says Economist Joseph Stiglitz”

  1. Topics about Toronto-schools | Obama TARP Advisors, Incompetent or in Banks’ Pockets: Says Economist Joseph Stiglitz on April 21st, 2009 9:15 am

    […] ChattahBox News Blog added an interesting post today on Obama TARP Advisors, Incompetent or in Banksâ […]

  2. Topics about Buckingham-palace | Obama TARP Advisors, Incompetent or in Banks’ Pockets: Says Economist Joseph Stiglitz on April 21st, 2009 9:44 am

    […] ChattahBox News Blog created an interesting post today on Obama TARP Advisors, Incompetent or in Banksâ […]

Got something to say? **Please Note** - Comments may be edited for clarity or obscenity, and all comments are published at the discretion of ChattahBox.com - Comments are the opinions of the individuals leaving them, and not of ChattahBox.com or its partners. - Please do not spam or submit comments that use copyright materials, hearsay or are based on reports where the supposed fact or quote is not a matter of public knowledge are also not permitted.