Smart move: Feds refuse to buy troubled assets with TARP – Jun. 8, 2009 .

I am usually not one to question Allan Sloan (but who am I to say I do or do not question person X or Y – I’m kinda nobody), but this is kind of a strange argument.

Okay, in our 20/20 hindsight, maybe, just maybe, the Treasury’s switch-a-roo with TARP to invest in bank equity instead of buying off troubled assets wasn’t so terrible.  I still think it’s lousy to have done that, but maybe Sloan has a point that the obstacles of figuring out exactly how to value those troubled assets might have killed the effort in the first place.

But we knew about those obstacles.  And I think the folks running TARP had a pretty good amount of leverage they could wield.  And, finally, Sloan’s use of the problems other, quasi-similar programs have faced as reasons why TARP would have been just have difficult to implement is a weird way around.  Just because another program has had problems doesn’t mean TARP would have had such problems.

And those assets are still sitting on bank balance sheets.  Massive recapitalization is still needed.  Hm.

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