optimistic that they can move quite quickly on this front, and we think we also moved quite quickly on the securities front, as well.
I’ve been going left. I want to go right.
Q What happens if you sent some of the assets they sell, they sell for a low price, and then some of the banks have to write down what they have and some of the new banks become insolvent?
SECRETARY GEITHNER: Well, I don’t think you should be particularly worried about that risk in the way this is designed, this program is designed. Because, just to step back a little bit and look at the bank piece of it — again, banks have a right to sell a pool of loans to a dedicated fund which will bring in private capital with government financing for that purpose, and that helps reduce that risk again.
But again, you should think about this in the context of a broader program where the government is going to provide a facility, in the form of capital, as insurance against the risk of a deeper recession. So you should think about these as complementary things.
In any case, you’re going to see the — remember, the government is — what we’re basically saying is we will make sure that there is sufficient capital in the system for these institutions to manage through — comfortably manage through a deeper recession. The virtue of that, of course, is that with that confidence, you’re going to have a greater lending capacity in the system, reduce risk of sort of progressive cycles of deleveraging, and that’ll make it more likely that you get recovery back on track more quickly.
Yes.
Q On the — Dr. Romer was making the rounds this morning on the program on the networks. And she said that across the programs on the issue of leverage net/net, she estimated that private investors would end up putting about seven to eight cents on the dollar into the programs across all of them at the end of the day. Can you comment on that, and if so, how do you get to that number?
SECRETARY GEITHNER: Well, without looking into exactly what they said, I don’t want to comment on her particular thing, so let me just do the basic objectives and design thing.
Again, dollar of capital from the Treasury alongside dollar of capital from a private investor, there’s financing available from the government on top of that. For that financing to be at risk, the private investor has to lose all its equity. Okay?
Now, again, you have to look at the structure against the alternatives. And the alternative structures all involve the government taking on much more risk with much less protection against the, you know, endemic problem that governments have in this context of overpaying adverse selection, getting stuck with a range of risks they don’t understand and can’t manage. So that’s what this is designed against. But you’re —
Q Do you have a ballpark number on — at the end of the day, rough