Financial rescue: Someone will win in the process

Once the Geithner plan was leaked in detail by the NYtimes, criticism started to pour in on negative aspects of the plan which heavily subsidizes the investors and the private parties. After reading the various articles attacking the plan, once thing seemed certain to me. You will always have some top economists (or) think tanks criticizing any plan that will be proposed for the rescue. There is no such thing called 'The Best Plan'. Any plan that will be proposed to get us out of this complex web, would definitely benefit a section of investor/private parties.Considering the enormity, complexity and urgency of the situation, you can't wait for a plan that is beneficial only to the tax payers and prevents even a penny to the private firms.

More the delay in rescue, will definitely worsen the economic situation and leads to more job losses. It is always better not to worry about the few hundred dollars of each tax payers money that goes to the private parties , rather than loosing out more jobs due to the delay in the rescue plan.

In the leaked out Geithner's plan, the proposed alternatives indicate that the Government is heavily dependent on the private parties to remove the toxic assets out of the banks. This clearly indicates that the government wanted to stop shelling out more tax payers money and involve private investors in the rescue plan. So, having realized this, private investors are going to exploit the situation and look out for some benefits. Since the govt has no better alternative, they are going to allow this. One of the first signs of the economic recovery is when you see the private investment firms starts showing interest in the bank's equity. On careful execution of this plan, it will win back the confidence that was lost by the investors on the banks.

If the private parties are not included, then the Govt. again has to infuse more money into these banks. It is already evident that, all the infused funds were not used for lending purposes, but were used by the banks to prevent itself from being insolvent. In order to start the lending process, banks definitely needs more money and is achievable only through the sale of these toxic assets. As per the proposed plan, it seems like Govt is taking all the risks involved in these assets, whereas the gains are shared by the private parties and the tax payers. Going by the plan, the govt. is going to auction these assets to the private parties and they will pay high prices as the downside risk will be handled by the govt. But the truth is undeniable that the private firms will handles these assets to profit than the government bodies. The risk of losing is less when it is in the hands of the private firms. But if the government dishes out the private parties in the rescue plan, it will be a highly risky bet for the govt alone to handle all these assets. It definitely need private firms' help in liquidating these assets as quickly as possible, so that the government can get back the tax payers money. But the govt should assure that, the private firms should not pool these assets and play around in packing and shipping them.