Good Bank/Bad Bank Is The Only Way
Back in September we applauded the idea of creating a Good Bank/Bad Bank scenario to solve the banking crisis and get the financial system working again. We don’t know why, but so far this scenario has not unfolded. Instead, the government has plowed good money after bad money into failing banks and while they have alleviated the pressure and brought the system back from the brink, they have only mustered a temporary fix. Make no mistake about it, as long as the toxic assets continue to plague these institutions, we will soon be back to where we were before…on the brink of collapse. We continue to believe strongly that the ONLY way to cure the system’s ills is to get the toxic assets off the books of financial institutions, even at a steep price, and let the assets take safe haven in a Bad Bank owned and operated by the federal government. Over time, these assets will crawl their way back to a level of reality and the government will likely profit from the distressed sales by the banking system. In the short term, the banks will be rid of this albatross and they will be able to get back to the business of providing money and credit to the Everyman and Everybusinessman, responsibly. Stop wasting time Uncle Sam! Stop allowing the patient to slowly bleed to death! Administer an immediate blood transfusion and let’s get the patient back to health right away! YOU MUST DO IT NOW!!!