I'd missed this post when Noam Scheiber first wrote it, but he agrees with Annie Lowrey: It might be a good thing for banks to "game" the Geithner plan. The basic argument is that if banks are recapitalizing themselves, even at taxpayer expense, and segregating the toxic assets, even at personal profit, then that's "working." It might not be working fairly, but it's success as the administration defines it, which is to say, a functioning banking system. Noam, I think, puts this nicely. "Being unfair doesn't doom something to fail," he writes. "And I'd take an unfair success over a fair failure." Rightly or wrongly, the administration seems to have decided that at this juncture, plans that were "fair" were unlikely to work and plans that would "work" were unlikely to be fair. There was just too much downside risk to nationalization, even if a successful nationalization might have proven itself the best possible outcome. Conversely, private investors were not going to participate without massive subsidies and inducements. And so here we are: The best possible outcome is one in which various sectors of Wall Street enjoy a huge windfall and "fairer" measures don't prove necessary because the unfair measures don't fail. Meanwhile, if the Geithner plan exposes the insolvency of the banks rather than recapitalizes them, then we're pretty much in a situation where Wall Street has proven itself unable to leverage sweetheart details, political power, and market trickery into a workable solution. That's a world in which their core competencies are exhausted and there's no alternative to a government solution.
