Go Elizabeth Warren! That's exactly what needs to be done. A congressional panel overseeing the U.S. financial rescue suggested that getting rid of top executives and liquidating problem banks may be a better way to solve the economic crisis.
The Congressional Oversight Panel, in a report released yesterday, also said the Treasury may be relying on too rosy an economic scenario to guide its $700 billion bailout, and declared that the success of the program after six months is “mixed.” Three of the group’s members disagreed with at least some of the findings.
“All successful efforts to address bank crises have involved the combination of moving aside failed management and getting control of the process of valuing bank balance sheets,” the panel, headed by Harvard Law School Professor Elizabeth Warren, said in its report. Of course, not everyone agrees:Two of the panel members, New York State Superintendent of Banks Richard Neiman and former New Hampshire Senator John Sununu, issued separate findings.
“We are concerned that the prominence of alternate approaches presented in the report, particularly reorganization through nationalization, could incorrectly imply both that the banking system is insolvent and that the new administration does not have a workable plan,” the two wrote. I think the "concern" here is central to the trouble we're having getting out of the mess. There is an idea floating around that the markets are all psychologically driven. In this case the worst thing you can do is to admit to the enormity of the problem, because this will destroy investor confidence, which will then tank the market. And okay, there is something to that I think. But c'mon! You think big investors aren't looking at the fundamentals and are just going on gut instinct? People have lost confidence in the market because the numbers needed to instill confidence are not available (because of things like level 3 assets and total fantasy land mark to model valuations.) But the truth does exist (all these assets could be valued, and we could figure out what these companies are really worth,) and until we do that no amount of "positive thinking" is going to fix things. Sununu and Neiman might be positive that it is incorrect to imply that the banks are insolvent, but they should share their numbers if they are so positive, because no one else has these numbers! Of course they don't either, they are just figuring that if they really believe it hard enough it will be the case. Remind you of anything else? Iraqis greeting us with flowers? The insurgency is on it's last legs? Nothing but a bunch of dead enders? If only people would believe we wouldn't have to do any hard work...
Thankfully people like Elizabeth Warren are doing the hard work.
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Thankfully people like Elizabeth Warren are doing the hard work.
- jim 4-08-2009 6:29 pm