Dear Mr. Geithner,
I was very pleased to hear that you were finally able to put together a plan to save the large speculative banks. I have heard that these banks are very important and staffed by the best and brightest which is why we, the taxpayers, must make sure they do not go bankrupt. So, given that my family will pay this bill for generations, I thought it would be appropriate to ask a few questions. I assure that, at this point, I am just seeking clarification and that I am not under any illusion that my opinion counts in any of this.
1) Will the pre-approved managers charge the government for the management of its position? If so, will this mean that BlackRock et al will charge 2+20% on the whole amount rather than on the amount they actually raised from their investors?
2) How will these managers get approval? Will anyone check how they have performed over the past couple of years or are we just going to round the usual suspects ala Casablanca?
3) Will there be a vetting process to make sure all of our "partners" have paid their taxes, etc, or are we going to use a lower standard than that required for other positions in your Administration?
4) Will the banks be forced to sell their securities at the auction or will they have a reserve price?
5) If the banks are allowed a reserve price, where will they mark the securities? at the bid? at the reserve price? at the old price?
6) What will you do if you discover that, at the available prices, a large bank has negative tangible equity? will you then force them to accept reality or will they be given a "gimme?"
7) What is the plan to unclog the balance sheet of the banks from the new assets which are still not considered by the bankers as "troubled," like Commercial Real Estate for instance, will there be another one of these when the time comes?
I had planned to ask you about your plan B in case the economy does not recover in 2009 as you have assumed, but I rather be a fan.