Geithner's Bank Rescue Plan Not A 'Cure-All': Roubini
Economist Nouriel Roubini said he thinks Treasury Secretary Timothy Geithner's plan to rescue America's banks is good, but not a cure-all.
"The Geithner plan, among the many ways you can get rid of these bad assets, is one of the better ones," said Roubini, who is the chairman of RGEMonitor.com, in an interview with CNBC.
"It still is not going to solve the problems of those institutions that are effectively insolvent. If you buy the assets at true long-term value, they're still going to be under water, so those institutions will still have to be taken over, worked out, and then, eventually, re-privatized," he said.
Roubini, who has constantly sized up the economic situation with more gloom than most, has not changed his downbeat view
"I'm still more bearish than the consensus," he said, projecting the unemployment rate will eventually top 10 percent before it begins to fall. He said his assumption is consistent with the standards being used by the Federal Reserve in its stress tests of the country's banks.
He said the Geithner plan will work only if it is applied properly.
"You have to apply it to the right type of institutions, those that are solvent," he said. "If you use it instead to deal with the problems of insolvent banks, you are delaying the resolution, and will end up like Japan, with zombie banks."