Academics Laud Bank Plan

Econ professors say capital infusion best option
By Ambreen Ali,  Newser Staff
Posted Oct 14, 2008 4:26 PM CDT
Academics Laud Bank Plan
The capital infusion announced today will stop the current crisis, academics say.   (AP Photo)

The Treasury gets gold stars for finally recapitalizing collapsing banks, with the Wall Street Journal reporting on reactions from economics professors:

  • Barry Eichengreen, UC Berkeley: "I would give it an A- for quality but lower the final grade to a C for lateness."
  • Kenneth Rogoff, Harvard: "Thank goodness they didn’t dally for another week."

  • Anil Kashyap, University of Chicago: "I would prefer giving the option to raise it privately first."
  • Brad DeLong, UC Berkeley: "Yes, it is the right move—but nonvoting preferred stock scares me as giving too great incentives to gamble for resurrection."
  • John Cochrane, University of Chicago: "There are all sorts of warts on it, but at least this one will probably work."
(More financial crisis stories.)

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