Why don’t we get the IMF to run TARP 2.0?

After all, Treasury Secretary Tim Geithner’s own former boss, International Monetary Fund Managing Director Dominque Strauss-Kahn, is being more honest about the degree of U.S. fiscal problems, than Geithner is.

Strauss-Kahn says bank restructuring (whether you use the N-word of “nationalization” or not) must be pushed forward, with getting honest about bank balance sheets – period.

If we really have $2 trillion or so in effed-up assets, as people like him believe, then TARP 2.0 under Geithner-Summers is like getting to the bottom of a jar of grape jelly, rattling the knife around, and expecting to have enough to make three or four sandwiches.

Martin Wolf adds that if Geithner or Larry Summers were advising a foreign country with our issues, they’d give the same unvarnished assessment as Strauss-Kahn.

So, why aren’t they? Wolf says it’s a mix of timidity and misdefining the problem.

I think he’s being too generous. I think its “good old boy” protection of friends of theirs.

Meanwhile, Wolf opts for a George Soros-type “good bank” solution, which, as a quasi-nationalizing proposal, has gotten less ink so far than the more common “bad bank” idea.

But, Wolf says he thinks banks are too toxic to let relatively solvent ones alone, without the shining light of a “good bank.”