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“Inauguration Day Can’t Come a Moment Too Soon!”

“Inauguration Day Can’t Come a Moment Too Soon!” That’s how Joe Nocera ended his column titled “In Search of One Bold Stroke to Save the Banks” in Saturday’s New York Times.

[By the way, the photo of the FDIC’s Sheila C. Bair by Chip Somodevilla accompanying the story fulfills David Pogue’s rule 3 for digital photography: “Get close. Fill the frame.”]

Beyond Bair’s picture, Nocera writes that “the next round of [bank] recapitalization — and it now appears the next $350 billion of TARP money is going to be used primarily for that purpose — needs to encompass the entire banking system, and needs to be truly enormous.”

Seems like we’re right at the abyss. It’s past time for bold action. It can’t come a moment too soon. Let’s roll!

[Update: See also Joe’s Executive Suite blog post – and the ensuing discussion!]

4 replies on ““Inauguration Day Can’t Come a Moment Too Soon!””

I couldn’t disagree more. I follow business news fairly close, and NOBODY said “the worst is over”. In fact EVERYBODY said the worst is yet to come and the TARP stuff was mainly to prevent total catastrophe. I am not giving my opinion on any of this, but at least set the record straight!
Yes, we need bold action, and mainly the restoration of confidence. I really haven’t seen anything out of Obama yet (am hopeful) that FDR didn’t do in the 30’s to (arguably) prolong the Great Depression.
BTW, yes a great shot of Bair!!

Don, I completely agree about the need to restore confidence – but it’s more than just treating it as a psychological problem or providing an attitude adjustment that’s required.
There’s a fascinating paper published last week by some staffers at the Federal Reserve Bank of New York [“Seismic Effects of the Bankruptcy Reform”] that discusses how the change to the US Bankruptcy Law in 2005 resulted in it becoming harder to file bankruptcy, thereby protecting the credit card issuers but leaving financially strapped consumers their only other option: foreclosure. That change to the law was intended to improve the financial performance of credit card issuers – and the unintended consequence has been that the new law helped destroy the banking industry more broadly!
What would you do to change the outcome?
Scott

Scott,
I wish I were smart enough to pretend how to get us out of this mess! I think no one event or person is to blame, and it is a culmination of many events and mistakes going back to ’77 and the Housing Discrimination Act, to the repeal of Glass-Segal, to the easy money policies of the last 8 years. I do think the rest of the article was thoughtful, and agree with a lot of it, however it was the last sentence in the second paragraph that I objected to. (I was a little grumpy last night…;-> )
Here we have the same people who contributed to this, trying to bail us out…Paulson was the one who talked Congress in allowing increased leverage…Barney was clamoring for more ‘affordable’ housing loans, etc. I do think I would have done something about Cox…the SEC has made too many mistakes, from Madoff to the uptick rule.
One thing about Obama which even his detractors agree on…he is a very smart guy. However, I think he won’t be able to live up to all the hype that has been heaped upon him. For the first time, I have become anxious on what we are heaping on our kids with all this debt we are piling up.

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