``Is anybody thinking there?'' asked O'Neill, who also served as deputy budget director in the Ford administration. ``It's too late, it's not going to make any difference and it's aggravating as hell when there's a better idea and you can't even get it in play,'' he said, recognizing little success so far in pitching his own proposal.
O'Neill, 72, was fired after an almost two-year tenure marked by strains with White House officials and comments that roiled markets.
`Just Like Cash'
His plan to deal with the crisis would start with a ``discounted cash-flow analysis'' of distressed instruments that are clogging the financial system. The government would guarantee the assets, paring back the support as principal and interest payments were made, he said.
``That should take care of the liquidity problem because if they have a government guarantee at a specified level they should trade just like cash,'' O'Neill said.
He likened his solution to the Treasury's decision Sept. 19 to guarantee domestic money-market funds for a year to try to stop a run on what traditionally have been among the safest of investments.
To replenish capital in banks, the government should make 20-year loans to institutions and charge 2 percentage points above the government's borrowing rate, he said. Regulators could count the loans as part of the banks' capital base, he added. Paying the premium would give banks an incentive to retire the government loans faster, he said.
O'Neill said he has tried to shop his ideas to congressional leaders including Joint Economic Committee Chairman Charles Schumer; Senate Banking Committee Chairman Christopher Dodd; and Senator Richard Shelby, the ranking Republican on the Banking Committee.
Senate Vote
``None of them are returning phone calls,'' O'Neill said. ``I honestly don't think they really understand it and they're so much in a bubble that it's impossible to penetrate it.''
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