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Geithner Loves the Market so Give him Banking Vouchers

I have a plan that doesn't (god forbid!) involve nationalization or government mandates, but compels the banks to spend government bucks for the purposes intended by Congress when it okayed the bailout.
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This week on Charlie Rose, Secretary of the Treasury Timothy Geithner said explicitly what has been implicitly all along in President Obama's approach to ailing banks and financial institutions. Responding to Rose's unusually tough questioning about why government has asked so little of the banks getting billions in bailouts, Geithner said the market is the solution to the market's meltdown, and that any attempt by government to interfere via nationalization or overly intrusive mandatory instructions would get in the way of the free market as it dealt with the crisis.

Now real market fundamentalists have made clear that this would mean keeping government out of the crisis altogether and letting Citibank and other wounded companies follow Lehman Brothers and Bear Stearns down the drain.

But Geithner doesn't love the market that much: he wants it both ways - big taxpayer bucks into bank coffers, but let the banks decide what to do with them (OK, maybe lay off those publication relations disaster bonuses and corporate jets). All risk to those civic shareholders known as taxpayers, all profits to the bankers and their private shareholders known as investors.

Well I have an alternative plan that doesn't (god forbid!) involve nationalization or government mandates, but compels the banks to spend government bucks for the purposes intended by Congress when it OK'd the bailout: vouchers. Submit the banks to the privatizing discipline of vouchers that has been used in the education and housing markets, and is the logic behind food stamps. (You can't spend them on movies or a ballgame, you gotta buy food with them.)

Keep giving out the dough to the banks but leave them with no choice but to pass the bucks on to you and me in the form of credit and loans. The banks can negotiate and administer the loans, government doesn't get involved in banking, but they will be working with federal vouchers rather than cash. And that means government bailout funds won't turn into greenbacks until they are actually in the hands of small businessmen, home mortgage applicants or consumers. If bankers stuff them into the vault to be used to pay off toxic debt or acquire some other failing bank, they will be worthless. Put a shelf life of say three to six months on them and banks will have to make these vouchers available as loans and credit. Or else. Use 'em or lose 'em.

With vouchers, the government (and the taxpayers whose money the government is giving away) can truly pass the buck without worrying that the buck will stop with the banks. And Geithner can relax, knowing nobody can call him a bank nationalizer or closet socialist. After all, what is more market than vouchers?