The first is that the plan is finally out

Ethan Harris is the author of "Ben Bernanke's Fed", published in 2008. It evaluates critically the Geithner plan to buy toxic assets from banks. According to him, very strong pressure from public opinion and politicians on the rescue of Wall Street has been add to the complexity and unnecessary additional cost plan.

What do you think of the plan announced by Tim Geithner to purchase toxic assets from banks

It is important in size and it is aggressive, but it poses several problems. First, I find extremely complicated. Treasury is doing the impossible to persuade private to intervene by subsidizing them without however to provoke the anger of the taxpayers. The result is a very complex risk-sharing plan. It would be unnecessary if complicated editing if there were not this political storm in Washington. How, then, if the plan is properly calibrated

The plan makes clear the distinction between loans and financial products

With regard to financial products, banks have a already depreciated them in their accounts. There should not be many problems with the "mark to market". This is very different for the loans that banks tend to depreciate the value only when the loss occurred. Research of the price will be more difficult in their case. This may inhibit some banks to participate in the program and to cede some of their loans. It is really difficult to know in advance if this will work. The Federal Reserve is totally overloaded and it will share the responsibility of the program with the FDIC, which is an expert in the assessment of loans.

The stock exchange has yet responded well to the announcement of the plan

Markets react to two elements. The first is that the plan is finally out. The second lies in the words of Barack Obama over the weekend. He has stressed that more was needed to focus on the regulation of the financial crisis on the bonus.

Private actors have what is let

Investors are very wary of the counterparty risk that represents the U.S. Government, in the sense that it may change the rules of the game at any time. If the private sector is too much money with this program, the Government could ask him to make. Otherwise, if the program loses too much money, the Government could ask the private sector to take more responsibility. This uncertainty creates nervousness. In a few weeks, Congress changed the rules on housing credit, put restrictions on wage compensation of leaders and taxed the bonuses for employees to 90 for any bank receiving over $ 5 billion of dollars of public assistance. All that because 400 recipients of AIG, is really take a shotgun to kill a mouse!

A public-private partnership can work effectively

It is not clear. More skilled people in Washington are to explain that the Government is not there to stop the machine, while on the contrary. But there is a real message to pass on the fact that they will not change the rules along the way. This uncertainty is that at the end of the Treasury released a complicated plan that cost to the taxpayer.

Tim Geithner insists on sharing of risks with the private sector. How do you understand this message

The private sector must take risks on investments, not rules. It is very important that the Treasury has a clear message on this subject. Usually, the rescue of banks are much simpler. Isolated toxic assets in a structure and it sells in time. This is what should have been done much earlier. Delays are costly to the taxpayer and that the economy slips further into recession. This is depressing.