The latest awful idea from Timothy Geithner

You have to read this New York Times article.

The summary at Calculated Risk barely begins to cover what Timothy Geithner is planning.

Here is Geithner’s plan: for every $3 investors put up, the government will match $97. Investors cannot lose anything beyond their initial investment, so the worst outcome for investors is losing that intial $3. The government money will be form of low-interest loans (secured against that $3), so nearly all the profits will go to private investors.

Geithner’s political ability has not imrpoved after the AIG fiasco:

The uproar over the American International Group’s bonuses has not stopped the Obama administration from plowing ahead. The plan is not expected to impose restrictions on the executive pay of private investors or fund managers who participate.

The best part? Only bailed-out zombie banks / primary dealers, like Citi, can participate. So if you want to get in on this, you need to (a) be rich enough to be a hedge funds and (b) pay the appropraite fees to Citi, which will take you on if it wants. You better not hire foreigners, either.