Here’s one idea of what to do the next time one of the big banks comes looking for help from the federal government:
Punish the bondholders, sack managements, turn operations over to the FDIC, investigate fraud and prosecute.
Read the whole thing.
Proof that day is not far away can be seen in the testimony in the recent Senate hearings on the foreclosure crisis:
We can either have a rational resolution to the foreclosure crisis or we can preserve the capital structure of the banks. We can’t do both.
Actions taken to date have not removed toxic assets from the banks’ balance sheets. Doing that would have revealed the awful shape that the banks are in. They’ve just kicked the can down the road.