As I have said repeatedly, we need a a national bank, not bottomless cavities of financial wonder that do nothing more than suck in endless dollars.
“We are down a path that this country has not seen since Andrew Jackson shut down the Second National Bank of the United States,” said Gerard Cassidy, a banking analyst at RBC Capital Markets. “We are going to go back to a time when the government controlled the banking system.”
Citibank and Bank of America are “buckling” under. More useless billions will be poured into Bank of America. It’s time to think outside the cavities. No more fancy rescue tricks.
Instead of investing tens of billions of taxpayer dollars in exchange for preferred shares in the banks, which has been the Treasury Department’s approach so far with its capital infusions, the government essentially liberated the banks from some of their most threatening assets.
The trouble with the new approach, analysts say, is that it is likely to conceal the amount of risk that taxpayers are taking on. If the government-guaranteed securities turn out to be worthless, the cost of the insurance would be much higher than if the Treasury Department had simply bailed out the banks with cash in the first place.
Christopher Whalen, a managing partner at Institutional Risk Analytics, said the approach also covers up the underlying reality that the government is already essentially the majority shareholder in Citigroup.
“There’s nobody else out there to invest in them,” Mr. Whalen said. “We already own them.”
If we own them, run them. But Bernanke, like some junky who never knows when to quit, just keeps on trucking:
Speaking to the London School of Economics, but addressing American audiences as much as European ones, Mr. Bernanke warned that the federal government had no choice but to put more money into banks and other financial institutions if it had any hope of reviving the paralyzed credit markets.
Choice? There are always choices. Try thinking outside the cavity.
Like a superstitious Easter Islander, Bernanke, through education and training, keeps wasting his wood on more and more stone statues. If this is an example of our best thinking, then we are hopeless.