Gaming Geithner

Tim Geithner has offered extremely generous funding to the private sector to help bail out US banks. The Treasury Secretary’s promise of lots of cheap non-recourse leverage could make plain vanilla investments in toxic assets attractive. But ingenious minds will probably find more elaborate ways to play Geithner’s game. To get banks’ and investors’ creative juices flowing, here are two ideas. The first game is one for banks – let’s call it the Merry-Go-Round. As part of the plan, a bank sells $...