The idea of buying toxic waste from banks has already failed once -- and now it looks poised to die a second death. The lesson here is that a bad idea is bad regardless of whether Hank Paulson or Tim Geithner pushes it. Why is it so hard for leaders to learn the difference between a bad idea and a good one?
As I posted in February, Hank Paulson sold the initial $750 billion Troubled Asset Relief Plan (TARP) last fall as a way to get toxic waste off the books of banks. The plan foundered when nobody could solve the problem of how to price TARP purchases -- price too high and banks take advantage of taxpayers; price too low and the banks take a bigger write-off and need to raise new capital.