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2:36	delong - Yeah. Both Larty and Tim are very impressive. When they are on your side, you usually win.

2:37	James Kwak - Then why not hire them as asset managers and provide all the capital from Treasury? If you think of Treasury and the Fed as one entity, inviting in the private sector to contribute capital gives them some risk but a larger amount of upside relative to the government.

2:38	delong - The fed trades one thing and one thing only, and it does not try to make money. Dannie and Freddoe do try to make money, but with very limited success recently...

2:38

felix - I think that one big difference between me and Brad is the downside of what happens if this plan doesn't work. I'm glad that a Summers-Geithner plan has a good chance of success. But if it doesn't, does that destroy the Obama administration's political capital, as Krugman thinks, or does it just make nationalization that much easier, as Brad seems to think?

2:39	felix - My feeling is that a failed plan would be Very Bad News for Treasury.

2:40	James Kwak - One of my worries is that banks do not find natoinalization to be a credible threat, so they can decide whether they want to take this deal or wait for a better one.

2:40	James Kwak - By "take this deal" I mean set their reserve prices at a level where the assets will actually be sold.

2:41	delong - That question is above my pay grade. Nut I think we know what Emmanuel and Axelrod and Obama think: they've pushed Geithner into the arena and told him to ride the bull...

2:41	felix - That's an excellent point. If they're feeling particularly aggressive, they might actually set their reserve prices at levels significantly above their present marks.

2:41	James Kwak - My biggest concern is not fairness, or subsidizing the private sector, etc., although that is a concern. I'm just skeptical that the markets will clear.

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