It is this aspect that the Treasury has decided to act

Assistant Associate Professor at New York University Stern School of Business, Augustin Landier has researcher months in residence at the IMF in Washington. Last weekend, he has published a note with Kenichi Ueda of IMF, on the restructuring of banks.

The new administration will appoint Kenneth Feinberg responsible for the remuneration of the bankers who received money from the State. That what can change

Whenever the taxpayer is required to support a Bank, it is inconceivable that there is no mechanism for governance of the State in Exchange. Treasury does not exercise its voting rights, does not speak of nationalization nor user of its prerogatives of shareholder to the Board of Directors. There is also a suspicion that the crisis is due to risk behaviours induced by poorly calibrated incentives. The bubble to get rich very quickly. It is this aspect that the Treasury has decided to act. It is less limiting the level of remuneration that change their shape. He wants to impose a common standard that discourages risk-taking in the short term. It is more conceivable that bankers continue to play Russian roulette without the pistol to the head. The remuneration will therefore performance assessed on much longer periods. Of course, policy was likely to mix and some will also want to regulate the remuneration levels...

The Federal Deposit Insurance Corporation has decided the week last to suspend the redemption of the toxic assets of the banks via private investors that it would be funded. What do you think

This part of the plan was doomed to failure unless you include very high subsidies from the taxpayer and it is a blessing that she did not go further. Recapitalize banks by subsidizing the sale of assets is probably the most expensive way to do this. The State was obligated to subsidize and Treasury had an ambiguous discourse on the nature of this assistance, which was a free lever. However when the State injects money, must be its communication very explicit about the cost. In fact, abandoning this way, by renouncing to capitalize by the sale of assets, the Geithner team shows that his first choice direct injections of capital has been good and proved to be sufficient. It is, somehow, a questioning of the Paulson doctrine, who abused à l' envi de the metaphor of toxic assets.

Is this the right time for the State to authorize the repayment of public funds by some banks

Several questions arise. The State had found a power of negotiation on the banks and risk losing it. Another element to take into account is that it may be destabilizing for the banks that are not in condition to repay. They may be stigmatized. Ironically, I think that this is a way to force these banks less well-positioned to recapitalize as quickly as possible and to accept plans that are more dilutive to shareholders to be able to get out they also.

Have what conclusions you drawn from your study of the various methods used to restructure the banks in the world in recent months

First of all that, in absolute terms, there is no reason to appeal to the taxpayer. Negotiations with bondholders, who agree to convert their debts into capital, should the most often suffice. This is the case in other economic sectors but it happens that, for banks, there is no rapid process that facilitates the transfer without destabilizing the system, some bondholders are not allowed to carry actions. It should be there are the automatic stabilizers, which allow a conversion in emergency of a part of the obligations if the regulator considers the position of a delicate Bank. It also that there is more transparency on derivatives and counterparties.