Problems With TARP by NY Times

I think this is what I said, from the NY Times editorial:

"But we are disturbed that Mr. Paulson wants the government to be a passive investor with little say on how these banks are run, despite the billions of dollars at risk.

That means the banks’ current boards and current management — the same people who got the country into this mess — will still be making all of the decisions.

We are not arguing that the government must take direct control of the banks it invests in. But in the case of extreme mismanagement, insisting on the replacement of some of the negligent executives, managers or board members may be the prudent thing to do."

And here:

The Treasury should also insist on stepped-up government supervision to ensure that sound lending resumes — and that reckless lending does not. Government regulators need to frequently review the rescued firms’ operations, daily if necessary.

The government must also have a say in major business decisions, including mergers and acquisitions. It’s also important to note that Mr. Paulson has not abandoned his original idea to buy up the banks’ bad assets. (Congress gave him the power to use a variety of tactics to restore stability, and he is rightly keeping his options open.)

That idea has always suffered from an inherent conflict of interest: the financial firms with assets to sell are in many instances the same firms the Treasury will rely on to value and manage the assets it is buying. That is an invitation for these firms to set the price too high or to indulge in other mischief at the taxpayers’ expense.

The Treasury has promised to independently evaluate potential conflicts, but it appears that officials plan to start with the firms’ own self-assessment of any problems. The Treasury needs to set clear standards and procedures for the firms it hires, not allow the contractors to set the rules."