The Problem With The Geithner Plan: The Financial Industry's Thrift Paradox

By Big Tent Democrat, Section Economy
Posted on Sun Apr 12, 2009 at 09:31:51 AM EST
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Hale Bond writes a diary that I believe demonstrates, inadvertently, precisely what is most wrong with the Geithner Plan - the decision to ignore the fact the banks are simply not going to lend very liberally, even when bailed out. Bonddad is critical of "pressure" on JP Morgan (because it took TARP money) to do a deal with Chrysler to help Chrysler avoid bankruptcy. Bonddad says this is a pitfall of "nationalizing" banks.

It seems more of an indictment of TARP and TARP 2 (the Geithner Plan) to me. Suppose for a moment that instead of TARP and TARP 2, the $750B had been spent instead to fund a government bank dedicated to stimulating the economy and job creation/saving. Thus, a borrower like Chrysler would have made the case that loaning money to it would help stimulate the economy and save and create jobs. The government could have taken a convertible debt position and/or negotiated with existing creditors on how senior the debt to the government would be. Chrysler (and GM) are just examples of how this could have worked. TARP and TARP 2 have not spurred significant activity in the credit markets. Lending is not significantly increasing in response to TARP. Direct government loans outside of the financial industry would have been much more effective. More . . .

Bonddad writes:

[There are] three inherent problems with nationalization. Who do you nationalize, how do you actually accomplish the process of nationalization with minimal market disruption and how do you prevent the politicalization of the nationalization process.

These three questions seem easy enough answer in my view - (1) You place in regulatory receivership banks that are deemed insolvent; (2) you follow the existing regulations for regulatory receivership and (3) you avoid politicization by following the existing process for regulatory receivership. Was that hard?

Pointing to the TARP money given to JP Morgan hardly supports the argument that "nationalization" leads to politicized lending policies. On the contrary, it demonstrates that politicization is endemic to bailouts.

Nationalizing insolvent banks actually removes these questions from politicization because FDIC regulators will be doing the grunt work of regulatory receivership, not deciding who gets a loan from the bank. Insolvent banks will not be giving loans, they will be in receivership.

However, a bailed out bank WILL be subject to political pressure in its lending practices. After all, the people running the bank have an incentive to play the political game - they want the bailout. The regulators do not care.

Of course the reality is JP Morgan should not have gotten TARP money - it is not insolvent. The crazy idea of "stigma" is the problem here. From Paulsen to Bernanke to Geithner and Summers, they have all sold us this idea that all banks should take TARP money. They should not have. the process has been, ironically, politicized as a result.

The problem at the heart of the Paulsen/Geithner/Bernanke approach is this idea that we must maintain and support the existing financial industry in order to reignite our capital markets. But putting aside whether lending can only be reignited by our existing capital markets is true (I think it is false), TARP and TARP 2 will not accomplish that anyway. The JP Morgan/Chrysler example is illustrative of the problem. Banks will be tighter now with their money (and our money, except for compensation apparently). Pumping money into them does not lead to increased lending on the scale required to stimulate the economy.

Again, it is striking to me that so many folks can see the need for government spending as fiscal stimulus for our economy but they can not see the need for government lending that bypasses the existing financial structure for the same reasons - that the private sector will not lend in the amounts needed. They won't, ironically, take risks NOW.

The thrift paradox applies to more than consumers.

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The Problem With The Geithner Plan: The Financial Industry's Thrift Paradox | 43 comments (43 topical)

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I don't really see how a problem (5.00 / 2) (#2)
by inclusiveheart on Sun Apr 12, 2009 at 09:52:55 AM EST

that is identified with the TARP program has any bearing on the good or bad of nationalization.

It is a weird diary. Goes something like this:

"Let me tell you why eating chocolate is bad. There were these people who ate too many Peeps on Easter Sunday and they got sick to their stomach. That's why eating chocolate is bad."

Sure (5.00 / 1) (#3)
by Big Tent Democrat on Sun Apr 12, 2009 at 09:54:20 AM EST

It was a strange one but it spurred me to finally write about the Thrift Paradox in the Financial Sector.


Yes and I think the thrift paradox (5.00 / 1) (#7)
by inclusiveheart on Sun Apr 12, 2009 at 10:07:19 AM EST

is an important issue.

I know you know that the main reason that every one of those banks would fight tooth and nail against a HOLC or other government lending program will be that they will see the government as "taking their profits". That's how a good number of them view the Social Security fund - they believe they are entitled to manage that money and resent the fact that they can't make fees on that fund.

In any case, the request by the government that banks take a cram down on mortgages was met with similar indignation amongst the financial institutions. Then we find out that they are foreclosing and leaving houses to waste away instead of putting them up for auction. Everybody loses. So what happens when and if this Chrystler bankruptcy does go through? Who is going to buy these "valuable" assets? Is that the next bailout? Will JPMorganChase and the rest of the Chrystler investors call up old Geithner and get him to start another PPIP to buy those assets too?

These questions among others and the answers that have emerged so far in this economic crisis seem to point to a sensible answer which is that is it time for the government to start lending direct and NOT through these financial institutions as they've been trying to do thus far. Because this middleman this ineffective and incredibly inefficient.


It's a game of chicken (none / 0) (#11)
by Big Tent Democrat on Sun Apr 12, 2009 at 10:13:36 AM EST

Indeed, BondDad's description of the bankruptcy process is not accurate. JP Morgan could take a real beating in a bankruptcy proceeding.

I bet JP Morgan would not mind if 10B of the TARP was instead given to Chrysler.

It's a game of chicken with Obama to some extent.


: It is all a game of chicken. (5.00 / 1) (#12)
by inclusiveheart on Sun Apr 12, 2009 at 10:21:55 AM EST

It has from the very moment the crisis started been a game of getting the government to absorb all the hits. Why would this situation be any different? We'll pay one way or another.
I really still believe that Obama's first stimulus effort should have been to pass a real healthcare reform package with a public option pegged to Medicare and Medicaid. Right out of the gate, he would have eased pressure on the car companies, given every individual and business in this country a leg up and he would have freed up wasted capital in the economy.
Now we pay, but we're continuing to pay out and encourage wasteful and inefficient models.

The premise that TARP and (3.50 / 2) (#29)
by Green26 on Sun Apr 12, 2009 at 02:10:54 PM EST

other US intervention have not worked and are not working is not correct.

US intervention has already resulted in positive impacts.

The commercial paper market has opened for good companies. Interest rates are low. More lending has occurred than would otherwise have occurred without the government intervention. The credit markets would have been much worse without the government intervention.


Nationalization of banks (5.00 / 1) (#27)
by Green26 on Sun Apr 12, 2009 at 02:00:47 PM EST

would involve increasing amounts of government control of banks. Hale's 3rd concern is government influence in lending decisions.

TARP has gotten the government involved with banks, and some in government believe the involvement gives the government the right to influence things like loan/credit decisions.

The government is trying to influence some of Chrysler's secured lendings. By the way, it's not to lend more, but to convert their secured loan to equity.

Why should government policy or desire influence how banks run their business? Why should the government cause those banks to increase their risk--by a substantial amount.

What's so hard to understand about Hale's view? Seems pretty simple and basic to me.


Why should we bailout the banks? (5.00 / 2) (#35)
by inclusiveheart on Sun Apr 12, 2009 at 06:15:35 PM EST

If it is too political for their tastes, then they can go find some other means to stay afloat.

Our government didn't screw these banks up. These banks screwed themselves up. Beggars can't be choosers.


The govenment went to the banks (none / 0) (#37)
by ChiTownMike on Sun Apr 12, 2009 at 06:38:30 PM EST

the banks didn't go to the government. And the government went to the banks with good reason. The government actually twisted some banks arms to take money so everyone would be "in" so those banks who actually needed the money would not be branded as a bad bank which would have probably caused a run on that bank. What is so hard to understand about all that?

You want to make the actual bailout the banks fault. It's the governments, they are the ones who stepped forward. Of course they could have let them all go bust like they did Lehman Brothers which of course sent everything else into instant free fall. Had they things today would be a lot worse and it would have cost us much more than 750 billion.

None of the nationalization supporters want to ot ever talk about that part. They want to make it sound like nationalization is free. It isn't.


No the government responded to (5.00 / 1) (#40)
by inclusiveheart on Sun Apr 12, 2009 at 08:41:20 PM EST

a banking crisis that they brought upon themselves - on so many levels it is embarassing - for them.

I remember the day Lehman's went down. Wow. To say that was a monumental day is an understatement. I actually understand exactly why allowing these people to collapse is a bad idea. I understand why Geithner's decision to let Lehman's go was beyond stupidity. These are a bunch of people who have nearly destroyed themselves (if not for our bailouts and window that don't open there would have been scenes like 1929), destroyed our economy, and are on the brink of destroying our government's financial position in the world. Enough. It it time for them to get real. They are not in a good negotiating position because any realist understands that this is an endless cycle of take, take, take if we do not simply break it.

And for the record, I am not "for" "nationaliztion" as much as I am in favor of rational and fair policy here. Sadly, this TARP thing is akin to some multi-bazillionaire bailing out his useless kid. If we want to do TARP, there have to be strings attached - there have to be rules - and there have to be some losses realized. OR we do what we've always done which is to preserve the customers' interests and the financial system and let the failures go the way of failures. But what we are doing now is wasteful and it is creating an untenable situation where we will all likely lose more than we would have had we just put these failed institution into receivership as we probably should have done in the first place.


: The US has helped Main Street (none / 0) (#43)
by Green26 on Sun Apr 12, 2009 at 11:07:49 PM EST

considerably by causing interest rates to be very low. Mortgage rates are at or near record lows. The $8,000 tax credit for first-time home buyers is causing significant numbers of new purchasers to enter the market. Housing prices have stabilized, or almost stabilized, in a number of markets. The Simuulus bill is helping various sectors, including construction.

You don't know who wrote TARP 1 or the (5.00 / 3) (#42)
by MyLeftMind on Sun Apr 12, 2009 at 10:13:26 PM EST

Geithner plan (TARP 2). We do know that pharmaceutical companies, oil interests and other powerful groups have been writing federal laws for many years. What's so hard to believe about Geithner, Congress and even Obama aren't getting "help" with TARP 2 and the Stimulus package? At the very least, Geithner's loyalties should be questioned. If he (they) are truly interested in protecting the majority of Americans, they'd let the banks fail and bail out main street instead. What that would look like is support from the ground up: 1) Refinancing of mortgages requiring originating banks to continue to process payments for a small monthly fee, and since the government funds the new loans, the public would get the returns, 2) Business loans from the government utilizing credit unions and only those banks that pass stress tests, and 3) Single payer health care to relieve Americans and American businesses of the outrageous expenses they now face.

That's what it would look like if our government wanted to support our economy while protecting most Americans. Instead we have a convoluted process that will limit transparency and hide what's going on while the super rich make off with the last bit of resources our great country has to offer.

Obama says we're all in this together, but I don't see any incentive for the multi-billionaires to stick around for the next fifteen or twenty years if our economy collapses. We are not in this together. We are footing the bill and allowing the super-rich to take advantage of us once again. Until progressives fight Obama on this, Geithner will continue to look out for the interests of the banksters at the expense of the rest of us.


Bailing out the banks is fine... (5.00 / 4) (#4)
by ricosuave on Sun Apr 12, 2009 at 09:58:12 AM EST

...if your goal is to save the banks. I would prefer they screw the banks and save the economy like you suggest.

That approach (5.00 / 2) (#5)
by Big Tent Democrat on Sun Apr 12, 2009 at 10:04:13 AM EST

also has the virtue of being more "market oriented."


The FDIC was set up to (5.00 / 7) (#8)
by inclusiveheart on Sun Apr 12, 2009 at 10:10:28 AM EST

protect depositors and to protect our financial system. It was deliberately NOT set up to protect the banks themselves. Sensible for a lot of different reasons - and it is a much more of a traditional competion-driven capitalist view of the financial sector, I might add, than this institutional protectionist approach that Geithner is taking now.


: Capitalism is dead (5.00 / 6) (#10)
by Big Tent Democrat on Sun Apr 12, 2009 at 10:11:38 AM EST

Long live crony capitalism!

At some point... (5.00 / 3) (#6)
by lambert on Sun Apr 12, 2009 at 10:07:11 AM EST

... if we really believe in accountability, we're going to have to stop saying "Paulsen/Geithner/Bernanke" and start saying "Bush/Obama/Bernanke." Eh? Because at the end of the day, either Obama or the banksters will end up holding the bag. I want it to be the banksters, but that only happens if Obama is pushed.

I hope there is no bag to be held (5.00 / 2) (#9)
by Big Tent Democrat on Sun Apr 12, 2009 at 10:10:54 AM EST

But if Bonddad want avoid "market disruption," by all rights the persona holding a bag here should be the banks.


Well, er... (5.00 / 4) (#13)
by lambert on Sun Apr 12, 2009 at 11:24:19 AM EST

"hope" is not a plan. I'm with Black ("accounting control fraud") and Galbraith ("SHOW ME THE LOAN TAPES") -- for households, this plays out as "show the the note." That's the denial being obfuscated by the word "complexity." IMNSHO.

It's like we've gone from have a President who's a dry drunk to a ruling class that isn't even willing to take the first step, let alone do a searching and fearless moral inventory....


: Don't make me have to arrest you (5.00 / 3) (#14)
by ruffian on Sun Apr 12, 2009 at 11:48:46 AM EST

More and more I get the feeling that is the game the Obama administration is playing here. Giving the banks all this money in hopes they will use it to cover their tracks in a hurry before people like Black and Galbraith wake the populace up to the fact that massive fraud has been perpetrated.
I have mental image of a cop standing whistling with his arms folded guarding the door as the crooks inside flush the evidence.

Some Thoughts... (5.00 / 2) (#15)
by santarita on Sun Apr 12, 2009 at 11:57:40 AM EST

I think Bonddad is simply pointing out that if the government is the party making banking decisions on loans for companies like Chrysler in the private sector, there is a risk that loan decisions will be made not on the basis of prudent lending but on the basis of political whim.

Of course prudent regulation (and enforcement) would guard against that but then the regulator is the government. So it has the potential to be another version of the fox guarding the henhouse. That the regulators are not immune from politics is beyond obvious - one has only to look at the last 8 years.

Temporary takeovers of some banks may be necessary but the goal would be to get them back into private hands as quickly as possible, Even if the government were able to avoid the temptation to use a bank for corrupt purposes, the suspicion would always be there.

If the government wants to force JPMorgan to do something that the bank considers imprudent with regard to Chrysler then the question should be why the government just doesn't directly "nationalize" the secured loan to Chrysler by buying the loan from JPMorgan?

Okay... (5.00 / 1) (#36)
by inclusiveheart on Sun Apr 12, 2009 at 06:31:07 PM EST

First of all there is no evidence that the banks have the capacity to be prudent lenders at this time in history. Seriously, after everything they've done, their assessment of how to handle this particular situation is highly suspect in my mind. They'd really have to prove to me that the potential collapse of Chrysler and the economies that satellite that giant company will be less injurious to their bankers than potentially taking a haircut to help the companies survive.

Second this tainted regulator line is ridiculous in that the problem with our regulators over the past eight years isn't that they've been corrupted - it is that the Bush Administration told the regulating agencies that they were NOT to act as watchdogs, but instead as servants to the financial sector which is a bs was of saying they were told NOT to do their jobs - they were told to stand down. Left to their own devices these banks destroyed themselves - all by themselves.

Banks get taken over weekly in this country. The integrity of that process is not a big question. That's because they don't mess around with trying to keep the same old management and artificially inflate the value of these failed institutions - they just sell them off or if they can't sell them - they create an orderly process for moving their depositors. Our FDIC system isn't tempted to be political because their goal is not to preserve the bank as is the goal with TARP.

JPMorgan is just one banker in a long list who has a stake in Chrysler. Most of those bankers are TARP recipients. They got assistance so they could give assistance through credit. If they're not going to give assistance then they should not be getting it themselves.


What are you talking about? (none / 0) (#38)
by ChiTownMike on Sun Apr 12, 2009 at 07:09:26 PM EST

You seem to be saying J.P Morgan should lend Chrysler more money in new loans. That is not the issue here. That is not what the government is trying to coerce them to do.


No I am not saying that they (5.00 / 1) (#39)
by inclusiveheart on Sun Apr 12, 2009 at 08:20:44 PM EST

should lend them more money. I am saying that they have a bunch of government bailout money that was specifically given to them to "free up the credit markets" and with that guaranteed money they should be doing that rather than holding onto the money and allowing other businesses to collapse. That's the point of TARP. The point of TARP was to string out the credit system in order for businesses to survive - not just the banks.


: My how people change their stories (3.00 / 1) (#41)
by ChiTownMike on Sun Apr 12, 2009 at 09:28:38 PM EST

You wrote:

They got assistance so they could give assistance through credit. If they're not going to give assistance then they should not be getting it themselves.
"Credit" is lending. So yes you did say the banks should lend them more money.
What puzzles me is where you got the idea that the banks are required to lend money because they participated in TARP. Show me where they are required to do so. Yes it was a hopeful government goal that lending would increase - and guess what - it has. Money is being lent. To businesses and for mortgages. Those loans don't count to you? The only ones that count are the loans not made? That's ridiculous.
And why should JPMorgan give up a preferred position that collateralizes their existing loans which puts their money at jeopardy, when the whole idea is to make banks stronger not weaker by bad bank practices?
If you had a second mortgage on my home and I asked you tear up the second mortgage and take an unsecured note so I could have a better looking credit report and could them borrow more money would you do that? Not if you have any sense you wouldn't. That is what you are asking JPMorgan to do.
BTW, JPMorgan said it is going to pay back the TARP money they were 'forced' to take so as not to stigmatize other banks. So if they were arm twisted to take the money and they want to pay is back ASAP then what obligation do they have?
Sorry to say this but you need to get your facts straight on both sides of the story. And when you said up top that they got assistance when they never needed assistance then saying they got assistance in a misnomer.

OK...let's look at that another way (2.00 / 1) (#18)
by Romberry on Sun Apr 12, 2009 at 12:06:23 PM EST

How is this...

Bonddad is simply pointing out that if the government is the party making banking decisions on loans for companies like Chrysler in the private sector, there is a risk that loan decisions will be made not on the basis of prudent lending but on the basis of political whim.

...different from this?

Bonddad is simply pointing out that if the government is the party making banking decisions on loans for companies like AIG in the private sector, there is a risk that loan decisions will be made not on the basis of prudent lending but on the basis of political whim.

That argument holds no water. It's blatantly obvious that who is getting the money is based not on prudence but political whim (or more accurately, political influence and connections.) If Bonddad was truly worried about that, well, he'd have to see that it plays both ways, yes?


You're Right About... (5.00 / 2) (#20)
by santarita on Sun Apr 12, 2009 at 12:50:48 PM EST

AIG. The government's decision to become a controlling stockholder of AIG was because of its systemic importance and the fact that the government didn't have any comparable regulatory options with regard to AIG.

Now that it is a controlling stockholder, AIG decisions (like awarding bonuses to employees) are looked at through a political lens. Senator Dodd can attest to that.


I don't buy... (4.25 / 4) (#21)
by Romberry on Sun Apr 12, 2009 at 12:57:43 PM EST

...the systemic importance argument. The vast majority of what AIG-FP was on the hook for were naked CDS instruments, i.e. gambling bets made by institutions that held no ownership or otherwise insurable interest in what they were betting against.

The reason for the AIG bailout was the pass-through to favored institutions...like Government-Sachs.

Gambling bets mean squat. If you don't own the bond you are betting on or trying to insure, the failure of the CDS means nothing. We were paying off these bets at par when what we should have done is return the vigorish, i.e. the premium, on the naked CDS instruments and negotiated on all others after (and only after) we were sure the buyers of the CDS had an insurable interest.

This whole thing is a looting operation. No more. No less.


Naked CDS instruments :) (5.00 / 2) (#23)
by Militarytracy on Sun Apr 12, 2009 at 01:02:02 PM EST

Investment P*rn!


Well... (4.33 / 3) (#24)
by santarita on Sun Apr 12, 2009 at 01:31:25 PM EST

if all we were talking about is covering some miscellaneous entities' gambling debts then I'd agree with you. But the entities that made the gambles were gambling with pension fund investments, retirement funds, annuities, insurance, sovereign wealth funds, etc. AIG's failure would have started a cascading set of failures that would make the consequences of the Lehman failure look like a day at the park.

Taking control of AIG versus AIG Chapter 11 is the difference between systematically unwinding over a period of time and chaotic unwinding with a lot of entities who don't care about US law (like China) thinking about other ways of collecting their monies.

The time to have done something sensible about derivatives' trading was about 10 years ago.


Everybody is still going to take a major hit (5.00 / 3) (#25)
by Militarytracy on Sun Apr 12, 2009 at 01:43:04 PM EST

Pension fund investments, retirement funds, annuities, insurance, sovereign wealth funds.....none of these things won't take a giant nasty beating. The slow unwinding of crap particularly in an evironment of ailing banking still leads to crap, only more slowly.


Maybe You're Right... (4.00 / 2) (#26)
by santarita on Sun Apr 12, 2009 at 01:55:29 PM EST

but I'd rather go with a strategy that has a better chance of mitigating the disaster than a strategy of chaos would have.


I would rather go in with a strategy (5.00 / 3) (#28)
by Militarytracy on Sun Apr 12, 2009 at 02:01:18 PM EST

that has a better chance of mitigating the disaster too and the current strategies being used are not such strategies in my opinion. The strategies being used enable further looting of the "real" wealth that investors still have in the markets while discouraging any "real" economic vigor that could lead to "real" economic recovery and "real" market recovery.


Did you read the link that Ethan put up (5.00 / 2) (#30)
by Militarytracy on Sun Apr 12, 2009 at 02:46:01 PM EST

on the Elizabeth Warren interview? She says that there is no discernable strategy, she can't even get clear "goals" out of Treasury. Some of the statements that Treasury has made to her about what they hope to accomplish are at direct odds with each other.


I Read the Warren Report... (none / 0) (#31)
by santarita on Sun Apr 12, 2009 at 03:49:58 PM EST

Treasury and the Fed have not done a good job of communicating and their strategies may be wrong. Hopefully Congress will ask some good questions and put some heat on them.


When are they going to start asking? (5.00 / 2) (#32)
by nycstray on Sun Apr 12, 2009 at 03:55:04 PM EST

End of April Is... (5.00 / 1) (#33)
by santarita on Sun Apr 12, 2009 at 04:03:16 PM EST

when Geithner is to appear before either the House or the Senate Banking Committees, I think.


: Thanks! (5.00 / 2) (#34)
by nycstray on Sun Apr 12, 2009 at 04:18:42 PM EST

I was kinda hoping you would say tomorrow :)

Suspicion from whom? (none / 0) (#16)
by Big Tent Democrat on Sun Apr 12, 2009 at 12:00:25 PM EST

Are there suspicions about Indy Mac?

Sheesh santarita. You are better than the argument you are trying to defend.

Bond's diary made no sense.


: Suspicion from... (5.00 / 1) (#19)
by santarita on Sun Apr 12, 2009 at 12:44:12 PM EST

whatever party happens not to be in power.
Indymac is a bridge bank that is set up for the purpose of winding up the affairs of the failed institution. So, temporary by definition.
Unless I've misunderstood you, you aren't in favor of permanent takeover of the banking industry just temporary takeovers of insolvent banks.
I do think that insulating regulators from undue political pressure is one of the key issues in terms of reforming the financial system.

I'm not sure they are being thrifty at all (5.00 / 3) (#17)
by ruffian on Sun Apr 12, 2009 at 12:01:49 PM EST

I think they are still filling up their big pits of insolvency. The ones they won't own up to, and that no one in federal government has an interest in making them own up to.

The business model that these deeply trouble (5.00 / 4) (#22)
by Militarytracy on Sun Apr 12, 2009 at 01:00:39 PM EST

banks were using is so unhealthy, and the way that they are fighting with the administration about making changes is further indication that they have no intentions of adopting healthy business models. We have to fight them tooth and nail for their own sanity, just so they can exist? Shielding them from their failure only allows them to avoid having to deal with what an unchecked unhealthy business model will do to your business. They get to learn not "too" much. I mean we don't want to overwhelm them or anything like that even though the rest of us are broken now. We get to be burdened with their learning of not much of anything and the price tag is whopping. As far as how they are eating our money that we could apply directly to the jobless wounds out there while avoiding propping these wheezing failing institutions up so that they can stagger along also not really able to take risks on any of us anymore is in my opinion pathetic. They broke the risk monitor and due to that choice that they made they can now no longer take on much risk at all. They drag all of us into their asthmatic poorly oxygenated existence. Back home to pack for Northport with my mouth still fully loaded.

Is the government crowing out borrowers (none / 0) (#1)
by Big Tent Democrat on Sun Apr 12, 2009 at 09:42:44 AM EST

from the credit markets? Of course not. But if someone says it is, I suggest the remedy is for the government to do some lending.