I just heard Sen. Hutchison (R-TX) refer to the last time we tried the ‘bad bank’ model. And she said that was the Resolution Trust Corporation after the S&L Crisis. Well, that’s not a ‘bad bank’ in any way that has any relevance. The RTC took over assets of S&L’s that went under, bankrupt, kaput. It then sold off the assets, recouping a lot of taxpayer value but still requiring a lot of government money.

There’s not a direct parallel. But the RTC is much more like what’s being advocated by those who say let the banks go under and have them temporarily taken over by the government before being sold to private investors. Again, not a perfect analogy since this wouldn’t be a liquidation — at least not entirely — but more a financial reorganization.

But the fundamental point is the same. The government takes over ALL the assets, good and bad. And after the institutions go under.

Boy, that’s pretty dumb. It sounds like there’s a good chance the restrictions on CEO pay contained in the Stimulus Bill is going to get pulled out in the final bill. Why? Because it might increase the total cost of the bill.

So we need these folks to make millions to help us balance the budget.

Bernard Avishai looks at the various options after Israel’s very weird election result. His bet: Netanyahu forms a hardline rightist government and takes his chances bucking Obama.

MJ Rosenberg argues that a Netanyahu government without the neo-fascist Lieberman is better than a Livni government with him.

It’s worth remembering here that the end of Netanyahu’s first premiership was brought about in significant part because he got frozen out in Washington (his criminal behavior didn’t hurt either). In some ways, that’s what happened to Shamir’s government in the early 90s, which paved the way for Rabin’s return.

Why did Obama pick a senior executive from embattled UBS to serve on his economic recovery board? UBS, you may recall, is embroiled in a widening federal investigation into what prosecutors allege was a massive tax evasion scheme concocted for wealthy bank clients. Another senior UBS executive has already been indicted and is awaiting trial in Florida. Zack Roth reports.

We interviewed Nobel Prize-winning economist Joe Stiglitz on Friday about the bank bailout. And I focused on two key questions. What’s wrong with the idea of buying the ‘toxic assets’ from the banks? And just what happens if we let these banks go bankrupt instead of continuing to prop them up with continuing bailouts?

Full-size video at TPMtv.com.

Late Update: On a related note, Paul Krugman has chimed in on his reaction to Geithner. His reaction is similar to others I’ve heard: It doesn’t include a lot of the terrible ideas we’d been led to believe. It also includes the kernels of what could be very good ideas (i.e., the bank “stress tests”). But in general, it’s just not clear what the plan even is.

DC conservatives’ top climate science expert a former producer for Rush Limbaugh.

It’s a real feather in the cap of Politico that they published this news article which claims that the newest scientific data says we’re actually experiencing global cooling.

Chafing under new scrutiny and limits on executive paychecks, many big banks are deciding that they’ve had quite enough of Uncle Sam and want to give the bailout money back as soon as possible. You get the sense we shouldn’t have treated them so badly because if we hadn’t they wouldn’t be forcing us to take our money back. That’s the report here from the New York Times.

The interesting thing though, when you read down into the article is that they don’t like the scrutiny and interference and they want to pay the money back to get us off their backs. Only, it’s going to be pretty hard to pay the money back because no one else is lending money right now, and certainly no one on as generous terms as the US government is. And if they paid back the money a lot of them might well go out of business.

In other words, they’d love to pay it back, especially if they had the money to pay it back, which they don’t. So presumably we won’t be hearing any more about this but the whining.

Things are tough all over.

The two named institutions are Goldman Sachs and Morgan Stanley, which, at least as far as I understand these things, are probably the healthiest of the big banks, though it’s a pretty low bar. Goldman CFO David Viniar tells the Times: “We just think that operating our business without the government capital would be an easier thing to do. We’d be under less scrutiny, and under less pressure. Not that we’d be out of the public eye; we’re still going to be in the public eye.”

Now, let’s assume for the moment that Goldman and Morgan Stanley really don’t need government TARP money or any other direct injection of taxpayer funds. This still doesn’t account for all the indirect ways most if not all of these companies are only afloat today because of government rescue and taxpayer dollars. Behind the scenes for something like a year, the Fed and the Treasury have been doing all sorts of guaranteeing debt offerings, loaning money, doing all sorts of things to keep these outfits afloat. That’s all in addition to the TARP money.

And take Goldman Sachs. You know that we’ve spent a hundred billion dollars of so bailing out AIG. Where do you think that $100 billion went? A lot went to pay off various banks and other financial institutions that would have gotten clobbered if AIG went under.

According to this September 2008 article in the Times, an AIG collapse could have led to as much as $20 billion in loses for Goldman, which was AIG’s largest trading partner. The simple truth is that none of these outfits can go it on their own. Most are already on their feet today because of government support. And others probably could not have survived without systemic support for the whole industry.

Simon Johnson: Axelrod and Emanuel Were Right (On the American Bank Oligarchs)