Friday, December 11, 2009

Business Lending Update

Washington Post reports that the Treasury is considering a scheme similar to what I discussed. The Treasury wants to give TARP money to the banks, who promises to lend the money to businesses.

The difference between Treasury's plan and my proposal is an accounting one, I guess. Treasury wants to transfer the money into banks' own accounts, like a deposit or investment. Whereas I was proposing to have the banks act as government agents in administering the funds. Kinda like selling IRAs or T-bills.

Because Treasury's plan involves changes in ownership, the pay-caps and other limitations apply, making the plan unsavory to banks and possibly requiring congressional action.

Edited: updated links and added tag.

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