The 44th president of the US took the oath of office a few hours ago. Now, let's see if the Senate approves his candidate for Treasury Secretary, Tim Geithner. His confirmation hearing starts tomorrow (Wednesday, January 21) morning.
President Obama and his team have a lot of work in front of them. Although Congress released the second tranche of the TARP (another US$350 billion), it's not clear how the funds will be used. It is clear that the first tranche didn't produce the desired results.
Three alternatives are receiving a lot of attention: 1) guarantee debt in exchange for warrants (the strategy used with Citibank in late November and with Bank of America last week); 2) buy toxic assets (the original TARP proposal); and 3) create a "bad bank" in which to stuff the toxic assets.
Fobaproa used a combination of capital injections and purchase of bad loans. Let's see if "Fobaproa Americana" ends up doing the same.
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