Why the USA did so much better than Europe in restoring its banking sector Because Tim Geithner could use TARP (Troubled Asset Recovery Program) moneys to recapitalise banks, as necessary, he could establish credible stress tests, and require bank equity to be brought up to levels consistent with the desired ratios applied to deposit levels as at the date of the stress test. The application of such public (TARP) moneys to the relatively few banks falling below the desired levels was then protected by constraints on such banks’ dividends, buy-backs and enhanced executive remuneration until all
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