It’s better to take over insolvent banks than try to prop them up

Kannon Fodder: Opposing views – It’s better to take over insolvent banks than try to prop them up.

The Kannon Team can’t wait for the big guy to weigh in on this Op-Ed piece in the U.S.A. Today by Robert Kuttner, author of Obama’s Challenge: America’s Economic Crisis and the Power of a Transformative Presidency

He writes:

“Geithner’s plan basically tries to paper over the fact that several of America’s biggest banks are insolvent in the absence of taxpayer bailouts. It attempts to restart the same system of excessive loan securitization that caused the crash — this time with guarantees or loans by the Treasury or Federal Reserve. Many details have not been released, because the Treasury has not figured out how this can work.

The taxpayers have already effectively bought much of the banking system. It would be far cleaner and more efficient for government to acknowledge that, take over the large banks, clean out their balance sheets, and then sell healthy banks back to private industry.”

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