Jeffrey Sachs writes:

Cynics believe that the Geithner-Summers Plan is exactly what it seems: a naked grab of taxpayer money for Wall Street interests. Geithner and Summers argue that it's the least bad approach to a messy situation, in which we need to restore banking functions but don't have any perfect ways to do that. If they are serious about their justification, let them come forward to confront their critics and to explain to the American people why the other proposals are not being pursued.

Let them explain the hidden and not-so-hidden risks to the American taxpayer of the plan that they have put forward. . . . So far Geithner and Summers tell us that their plan is the only option, but without a word of further explanation as to why.

(Emphasis supplied.) Precisely.

Speaking for me only

That's according to a new study from Joshua D. Coval, a professor of Business Administration at Harvard, and Princeton economist Jakub W. Jurek.

Coval and Jurek write that the prices of toxic assets reflect fundamentals and that the low prices are not--as Geithner and Treasury argue--the result of "fire sales."

"Policies that attempt to prevent a widespread mark-down in the value of credit-sensitive assets," Coval and Jurek write, "are likely to only delay – and perhaps even worsen – the day of reckoning."

[More...]

Nate Silver writes about the Pew poll showing President Obama with the widest partisan divide in recent years:

These are highly partisan times in America. "Bipartisanship" (or, in the Obama nomenclature, "post-partisanship") makes for a catchy campaign slogan, but is difficult to execute upon in practice.

Knock me over with a feather. Who could have predicted that? I guess politics has not changed forever. Can we concentrate on the policy changes now?

Speaking for me only

A basic tenet of criminal procedure is that after arrest, you have the right to be brought before a judge without undue delay. (Think, Mallory v. U.S., 1957 and McNabb v. U.S., 1943.)

The Supreme Court upheld that principle today and threw out a confession, even though it was voluntary, because the cops waited too long to take the federal bank robbery suspect to court.

Today's case is Corley v. U.S., written by Justice Souter. The opinion is here (pdf). [More...]

Defenders of Tim Geithner criticized William Black for arguing that the Prompt Corrective Action Law mandated regulatory receivership for insolvent banks. I noted and discussed the criticism here. Now the subject of the criticism, Black himself, has responded along the lines I brought forth:

By now, everyone knows about the United States' torture policy. What we do not know expressly is who precisely was involved. We know that President Bush, Vice President Cheney, CIA Director Tenet, his deputy John Brennan (now an Obama NSC deputy), Yoo, Bybee and many others were involved. The details are important and need to be investigated of course, but the big push to not release three torture memos seems a strange place to draw the line. And yet it is being reported that Obama deputy John Brennan has cajoled CIA Director Leon Panetta to join him in opposing the release of these memos despite the approval of Attorney General Holder and now it is being reported that the Republican Senate caucus is threatening to go nuclear if the memos are released:

One senior lecturer at the University of Chicago is dissatisfied with the Geithner Plan:

Even if it is successful, the [Geithner Plan] will add very little new capital to the banks — roughly only the amount paid for toxic assets that is over and above their current value.

[More...]

Former Alaska Senator Ted Stevens' criminal conviction is history, but the Judge is still going. Today (yes on Sunday) Judge Emmett Sullivan entered two orders (available on PACER):

• MINUTE ORDER as to THEODORE F. STEVENS. The Court, sua sponte, directs that by no later than 10:00 a.m. on April 6, 2009, the government shall provide to the Court copies of all material gathered post-trial and produced to the defendant. The government shall also provide to the Court all exculpatory evidence, witness interviews, 302s, and affidavits gathered, created and/or reviewed as part of the investigation into the Joy Complaint, and the attorneys notes regarding the April 15, 2008 interview with Bill Allen, whether or not that material has been produced to the defendant. Signed by Judge Emmet G. Sullivan on April 5, 2009. (AS) (Entered: 04/05/2009)

[More...]

As a believer in American Exceptionalism, I am well aware of how arrogant the phrase sounds. So kudos to President Obama (via Steve Benen) for his terrific answer to a question on American exceptionalism:

This is an interesting development:

[Elizabeth] Warren, a Harvard law professor and chair of the congressional oversight committee monitoring the government's Troubled Asset Relief Program (Tarp), [will issue] a damning report that will question the administration's approach to saving the financial system from collapse. . . . She declined to give . . . detail[s] but confirmed that she would refer to insurance group AIG, which has received $173bn in bailout money, and banking giant Citigroup, which has had $45bn in funds and more than $316bn of loan guarantees.

Warren . . . believes there are "dangers inherent" in the approach taken by treasury secretary Tim Geithner, who she says has offered "open-ended subsidies" to some of the world's biggest financial institutions without adequately weighing potential pitfalls. "We want to ensure that the treasury gives the public an alternative approach," she said, adding that she was worried that banks would not recover while they were being fed subsidies. "When are they going to say, enough?" she said. . . .

I hope you can't go blind from reading 3,000 pages of wiretap affidavits in 48 hours. I still have 600 pages to go. 33 phone lines tapped in one case, what a monster.

Here's an open thread for those of you who are spending your Sunday in a more pleasurable way.

In response to my post on bank holding companies, regulatory receivership and the Geithner Plan, Geekesque cites Justin Fox on why CitiGROUP can't be taken over. I think Geek misunderstands that I do not want CitiGroup taken over, I want CitiBANK taken over. However, he believes CitiBANK is not insolvent. The question is why isn't CitiBANK lending? Do they need more liquidity? That seems implausible in light of the fact that the Fed has printed so much money and has lowered interest rates to banks to virtually zero. Geek argues that in order to solve the financial crisis, the "non-banks" must be saved: