General Motors and the Citigroup Bailout

Some interesting articles on the news of the day.

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By Michael Barone, Thomas Jefferson Street blog.

Alex Taylor of Fortune provides a very interesting long-term take on General Motors. The structure of the company has proved to be a liability for many decades, but Taylor makes it clear that different executives have had different effects—and that alternative paths might have been taken at several junctures. He also helps me to understand why the GM board has stuck with CEO Rick Wagoner, under whom the stock price has fallen from $75 to $3.

Eugene Ludwig, comptroller of the currency (that is, a leading bank regulator) during much of the Clinton administration, has a smart article on the Citigroup bailout and the need to quarantine toxic financial assets in an Resolution Trust Corp.-like structure, where vulture capitalists can buy them for low prices and try to get more value out of them. This was, as I understand it, the original thrust of the argument Treasury Secretary Henry Paulson made for the TARP bill passed by Congress October 3, although by that time Paulson had apparently decided to rely on capital injections into the banks rather than purchase of toxic assets. We have to do both, Ludwig argues, and with the terms of the Citigroup rescue, we now are.

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