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Thursday, April 16, 2009

More than Projected, Less than Feared

David Altig wonders if there's any lessons in the parallels he sees between the current financial crisis and the "saga of the Resolution Trust Corporation":

Déjà vu all over again, by David Altig: I have, recently, been experiencing a strange sense of familiarity watching the Congressional Budget Office's (CBO) efforts to monitor the budgetary implications of the Troubled Asset Relief Program (TARP). On the one hand, the long-term costs are rising...

On the other hand, the CBO wants to book less spending in the near term than what the Treasury has in mind, for reasons that have to do with accounting procedures and the pace of actual TARP spending...

After a few minutes of pondering why it seemed like I had seen this before, I flashed back to my early days in the Federal Reserve System and the saga of the Resolution Trust Corporation, the Congress-created vehicle that helped the country work its way through the aftermath of the 1980s savings and loan crisis. ...

The last great experiment in working through financial crisis took longer than expected, involved some accounting pushing and shoving at the outset, confronted a skeptical Congress, and cost more than initially projected, but quite a lot less than feared.

Make of it what you will.

    Posted by on Thursday, April 16, 2009 at 12:33 AM in Economics, Financial System, Policy | Permalink  TrackBack (0)  Comments (4)

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