Sounds like this will become even costlier in the not so distant future. The big problem is that Republicans and too many Democrats live in a Pre-Credit Crisis world. Ehem, folks, things have changed. The bubble burst yet Wall Street has convinced too many in Washington that we need to maintain a business as usual approach. Sure they talk about trimming bonuses but look where that's going now that the friends and apologists of Wall Street have moved in. It's clear the GOP wants to maintain the status quo and even the Obama administration (or shall we simplify that and call it Clinton Lite) has softened its position out of their fear of standing up to bullies and the people from the Clinton years who thought it was possible to be nice with this crowd. Kumbaya, right?
Back in the real world, the GOP is going to continue to coddle Wall Street and as long as Geithner, Summers and friends of Rubin stick around, the economy is not going to progress and be ready for the next round of expansion in a few years. If this pathetic situation wasn't so serious it might be funny to watch this futile attempt to hold the mushy middle. Unfortunately for all of us, it's serious and they're seriously blowing it.
Some of the nation’s large banks, according to economists and other finance experts, are like dead men walking.Public-private investment fund? That's so Pre-Credit Crisis. Move on folks. Move on.
A sober assessment of the growing mountain of losses from bad bets, measured in today’s marketplace, would overwhelm the value of the banks’ assets, they say. The banks, in their view, are insolvent.
None of the experts’ research focuses on individual banks, and there are certainly exceptions among the 50 largest banks in the country. Nor do consumers and businesses need to fret about their deposits, which are federally insured. And even banks that might technically be insolvent can continue operating for a long time, and could recover their financial health when the economy improves.
But without a cure for the problem of bad assets, the credit crisis that is dragging down the economy will linger, as banks cannot resume the ample lending needed to restart the wheels of commerce. The answer, say the economists and experts, is a larger, more direct government role than in the Treasury Department’s plan outlined this week.
The Treasury program leans heavily on a sketchy public-private investment fund to buy up the troubled mortgage-backed securities held by the banks. Instead, the experts say, the government needs to plunge in, weed out the weakest banks, pour capital into the surviving banks and sell off the bad assets.
