January 15, 2009

Can't Anybody Here Play This Game?

Bank of America, which supposedly was going to save Merrill Lynch's role in the financial system, now wants more TARP money to absorb Merrill's losses. After its stock nearly tripled from its recent low, Citicorp is plunging again.

Barney Frank and Phil Gramm have indignantly declared themselves blameless. Bernanke is an expert on the Great Depression, but he let Lehman fail. Paulson was going to buy up troubled assets, and then he wasn't. (Geithner didn't do his taxes correctly.)

This as though we'd broken the Japanese code in 1940 and then let Pearl Harbor happen anyway.

Addendum. Someone--I didn't save the link--argued that a binding government guarantee to cover unforeseen Merrill losses must have been part of the inducement for BofA to do the acquisition. Plausible but not compelling, IMO.

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