The Geithner Plan: How the Public Can Gain

By Reuters Staff
March 24, 2009

One further thought about the Geithner bailout plan: a lot of relatively small and new public-private investment partnerships are going to be issuing debt with an FDIC wrap. In pratice, that’s likely to mean bonds with no credit risk but with a large illiquidity premium. If you’re a risk-averse retail investor who doesn’t want to take credit risk but who’s also scared of the Treasury bubble, this could be a sensible investment. You get none of the upside, none of the downside, and a large part of the implicit subsidy. It’s just a pity that it’s so hard for retail investors to buy bonds in the US.

Reprinted from

No comments so far

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see