(1888PressRelease)
March 24, 2009 - The Obama administration's latest plan to help banks get credit flowing again is drawing a tepid reaction from investors and academics, who say the proposal comes with too many strings attached and is unlikely to stimulate lending industry wide.
And even if banks are willing to start lending more money, they wonder if many people will be able to take on more credit until the economy gets going again.
"We went on a borrowing binge," said Frederick Russell, Chairman at Jackson Bernstein Associates. Russell went on to say "Debt levels, especially in households, are too high or unmanageable."
The plan Treasury Secretary Timothy Geithner intends to announce Monday aims to create a new government entity, the Public Investment Corp., to help buy up to $1 trillion in toxic assets on banks' books.
The initiative will seek to entice private investors, including big hedge funds, to participate. It will do so by offering billions of dollars in low-interest loans to finance the purchases and by sharing risks if assets fall further in value. Analysts agree that stabilizing the banking system is crucial. But some wonder whether the proposal will create more problems.
"It's quite possible we could make bad banks out of good banks," Russell said as he finished his speech in Seattle yesterday.
Jackson Bernstein Associates provides advisory services for a variety of types of companies. Through our experience, creativity, and service, we strive to bring added value to every transaction. We thoroughly evaluate each individual situation and, using our extensive experience as the foundation, tailor made solutions for our client's unique objectives. Our creativity and flexibility will ensure each of our clients will receive optimal value from our services and from the completed transaction. Rather than a rigid set of predetermined services, Jackson Bernstein Associates approaches each transaction with flexibility and more importantly reliability.
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