Michael Wiseman, a partner at Sullivan & Cromwell LLC , spoke Monday at the Securities Industry and Financial Markets Association's Summit on the Troubled Asset Relief Program about different tools the Treasury and Federal Reserve will have to bring into play to help save a financial system where financial institutions are often "too interconnected to fail."
Continue reading below
"In many respects 1933 gives insights into how to handle this kind of
financial crisis," Wiseman said. "Between 1932 and 1935, banks didn't
increase lending; instead, they shored themselves up and made sure they
had liquidity. What you see from the Great Depression is that it took
a combination of programs including FDIC insurance
and capital injections to free up credit and get banks lending again.
"The AIG restructuring is an example of the government using the
different tools," he continued. "It's a mistake to use only one tool; it
takes the creative use of all of them and some things that haven't
been thought of yet to solve this crisis." - George White
See more posts from the SIFMA TARP Summit
