Wednesday, April 8, 2009
The Congressional panel overseeing the bailout is blasting the government's approach, saying that the government has to close insolvent banks. Some quotes from the panel's new report:
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...
[Bank liquidation would be] least likely to sap the patience of taxpayers [and] provides clarity relatively quickly [to the markets]....
Allowing institutions to fail in a structured manner supervised by appropriate regulators offers a clearer exit strategy than allowing those institutions to drift into government control piecemeal.
The following experts agree that the insolvent banks should be liquidated to save the broader economy:
- The recently retired President of the St. Louis Fed, William Poole.
- Nobel prize-winning economist Ed Prescott
- Nobel prize-winning economist Joseph Stiglitz
- The leading monetary economist and co-author with Milton Friedman of the leading treatise on the Great Depression, Anna Schwartz.
- Economics professor and senior regulator of the S & L crisis, William K. Black
- Leading economist Nouriel Roubini
- Highly-regarded PhD economist Michael Hudson
- Well-known economist Marc Faber
- Liberal billionaire investor George Soros
- Republican congressmen McCain and Shelby
- And many others on both the left and the right
The choice could not be more clear: Break up the insolvent banks in an orderly manner, or the economy will not recover for many, many years.