Obama Citizenship

President-Elect Team Considers Government-run Bank to Ease Credit Issues

By Phil

From Reuters:

WASHINGTON (Reuters) - The incoming Obama administration is considering setting up a government-run bank to acquire bad assets clogging the financial system, a person familiar with the Obama team’s thinking said on Saturday.

The U.S. Federal Reserve, Treasury and Federal Deposit Insurance Corp have been in talks about ways to ease a banking crisis that is once again deepening — and a government-run “aggregator bank” is among the options.

Outgoing Treasury Secretary Henry Paulson and FDIC Chairman Sheila Bair both said on Friday a government bank was one of a number of ideas U.S. regulators had been discussing.

The source said advisers to President-elect Barack Obama, who takes office on Tuesday, were also considering the idea of an aggregator bank among a range of options that could be pursued.

David Axelrod, a top adviser to Obama, told Reuters the new administration would have something to say about a fresh approach to the financial crisis in “the next few days.”

“I’m not going to get into the structure of how we’re going to approach the revamped financial rescue package,” Axelrod said after speaking to a conference of mayors in Washington.

“What we have to do is approach this with a lot more transparency on the front end.”

According to Article 1, Section 8 (and for various clauses thereunder) of the Constitution, the concept of a government-run bank might actually be a very constitutional thing to do. Of course, it would be really nice if all that currency floating around were actually backed by something other than government fiat (e.g.: “it’s worth exactly what we say it’s worth”).

Of course, this is all dependent on what the actual proposal would be, if the incoming Administration even considers this option as an option.

-Phil

Full post as published by The Right Side of Life on January 17, 2009 (boomark / email).