Why Geithner Deserves A Shot

James Surowiecki makes sense:

I think the costs of nationalization likely outweigh the benefits, and that in any case it would be very difficult for Obama to get Congress to authorize the trillion dollars or more the government would need to take over America’s biggest banks. And I agree with Thoma that the Geithner plan could work. But what I like best about his conclusion is something else: his implicit recognition that the people who came up with this plan Geithner, Larry Summers, and Ben Bernanke are well-versed in the problems of the banking system and serious about trying to solve them, rather than being either oblivious or corrupt.

Much of the discourse around the Geithner plan, and around the nationalization debate more generally, seems to assume that Obama’s economic policymakers don’t understand the gravity of the situation or the virtues of nationalization, or else it assumes that they don’t really care about improving the real economy. I’d be very surprised if either of those things was true. The Geithner plan may be a mistake. But if it turns out to be a mistake, it’ll be one because Geithner and Bernanke made an incorrect evaluation on how much the banks’ toxic assets are really worth, and/or because they overestimated how expensive and arduous nationalizing a big bank would be. It won’t be because they didn’t understand the problem.