The Public-Private Investment Program (PPIP), Treasury Secretary Geithner's plan to save the US financial sector from catastrophe, is...uh...complicated. I won't try to describe it (for that, I"d suggest going here). I will say that from what I understand, it is basically asking the private "investors" to price something that will mostly (completely?) be paid for with tax dollars.I don't know if this is the right approach or not. I do want to note something I don't think other people have mentioned. In reading the Ryan Grimm piece about the nationalization of IndyMac, the following stood out:
Depositors didn't all stick around to see how things worked out. A year ago, the bank was sitting on those $19 billion in deposits. When it was finally sold last Thursday, that number had fallen to $6.4 billion.
From $19 billion to $6.4 billion. That is a drop of about 67%. People weren't made to feel secure enough by the FDIC to not pull their money out. I am left wondering if nationalization of the largest banks wouldn't create the same illiquidities and/or create runs on the banks involved? Is this why we are moving forward with TARP v.2?
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