In this much-talked about Charlie Rose roundtable with Nobel Laureate Joseph Stiglitz joined by Bill Ackman of Pershing Square, Andrew Ross Sorkin of the New York Times and Kate Kelly of the Wall Street Journal, these experts discuss the government-administered stress tests. Joseph Stiglitz has been particularly negative about the Obama Administration’s banking crisis plan.
If you want to know what is going on in the U.S. banking system and how the Federal Government plans to deal with big banks, this is a must-see video. Nationalization, debt-for-equity-swaps, bailouts, capital, leverage, everything you want to know is in this discussion. Ackman does a good job in arguing that the bailouts are NOT going to increase lending and that debt-for-equity swaps are necessary.
These stress tests are supposed to tell us who’s strong and who’s not among the 19 largest financial institutions in the United States.
Stiglitz has the money quote here.
“The issue is who is going to bear the risk of the uncertain valuation [of assets on bank balance sheets] and is it the people who gave the money to the bank [bondholders] or is it the U.S. taxpayer.”