Tonite I will be on Fast Money with Dylan Ratigan on CNBC at 5:30pm discussing tomorrow’s Bank bailout plan and the good and bad ideas within it.
1. Stop Regulatory Capture: Saving the banks should not be the goal; Saving the finacnial system, credit operations and taxpayers should be. No more “sweetheart” deals for the incompetant creators of the mess!
2. Bank Aggregator: Federal assistance to the private equity sector buying toxic assets sounds like a bad deal for taxpayers: We have all the risk, but private equity has all the upside;
3. Good Bank/Bad Bank is a stop gap measure. The banks that are insolvent should not be rescued. Let the mortally wounded banks die, and spin out their best components — adequately capitalized, with zero debt!
4. Foreclosure Mitigation will only work if we recognize that a modest amount of delinquent homes can be saved from foreclosure; Unfortunately, the days of easy credit put too many people in homes they could not possibly afford;
5. Expanded Insurance Wrapper: Has not worked. The Bank of America and Citigroup bailouts had the US taxpayer guarantee the bad paper; The banks still went to hell, until yet another rescue plan materialized;
6. Transparency in Governance is a good idea; Does this mean the Fed will be revealing what paper they are holding?
7. Stress test? Saving Isn’t that suppsoed to be happening already with these banks via the FDIC?
UPDATE Here is the Video: