Wednesday, February 4, 2009

Letting Failed Banks Die

Robert Borosage writes:

Why is Washington filled with faux populist promises about curbing bonuses, capping executive pay, forcing banks to lend, even as the managers that drove the banks off the cliff are still keeping their jobs, collecting their paychecks and issuing their bonuses and dividends?

One reason might be that these same bankers and financiers are leading donors to both political parties. Thus far, they've been getting an amazing return on investment with a few million in political contributions yielding hundreds of billions to keep them breathing.

Obama's Treasury Secretary, Tim Geithner, according to Politico has
announced that: "We have a financial system that is run by private shareholders, managed by private institutions, and we'd like to our best to preserve that system."

Exactly. And that's why the zombie banks can't be kept on life support. The management failures can't be rewarded. The shareholders must take their losses. To sustain a private banking system, we've got to let the failed banks die. And to do that, without bringing down the entire system, we have to arrange a dignified burial, and orderly dispersal of the assets.

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