Some may have noticed last week that Bank of America, having eaten heartily at the table and gobbled up a few other failed companies like Countrywide and Merrill Lynch, has now lined up for Federal TARP BailOut money – your tax dollars at work.
Tom Friedman’s Sunday NYT column talks about Pres. Obama convening a meeting of the 300 top US Bankers and having a “Come to Jesus” lecture – Friedman’s thinking, though bold, was not bold enough and was exclusionary of billions of humans on this planet – I would expand that to a “Come to Jesus/Moses/Buddha/and Everybody Else, Be They Atheist, Pagan, Agnostic, Wiccan, included, for Our Last Chance to Get This Banking Thing Right.”
As we peer over the cliff in this still young year to glimpse what is promised to be an even nastier 2009 than 2008 was, it is apparent that the recipients of the first $350Billion in BailOut funds, whatever they used them for, did not use them to loosen up the still frozen-solid Wonderful World of Credit, a bedrock of our magnificently successful national experiment in Capitalism, with a capital “C.”
Without Credit, our immense national economic engine, still the envy of the world, sputters and grinds to a halt, as we are witnessing every day that we read the Business Section of our favorite newspaper, or the Blogs of our choice, or any newsmagazine.
Banks are all still afraid of what they don’t know – in Donald Rumsfeld’s immortal words: “As we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns — the ones we don’t know we don’t know.” Bankers are sitting up nights terrified of every category and shade of Rumsfeld’s metaphysical parsing of what they don’t know and what can kill them, financially speaking, causing the FDIC Boys to swoop in and shut them down. And that brings us back to those exotic securities – the Collateralized Debt Obligations and Credit Default Swaps that nobody understands, but which have succeeded into capsizing our financial ship of state, amazingly still buried deep in so many Bank’s balance sheets.
It is high time for the Federal Government to form another Resolution Trust Corporation (RTC) like we had back in the early 90’s to clean up the S&L mess. The new entity, pick some letters and make whatever acronym you like, will be funded with some of that give-away largesse of your tax dollars and mine, and will be mandated by Congress to buy up all the stinkers on all the Banks’ balance sheets, once they all finally come clean and show what they are holding.
This big poker game with our nations,’ and indeed the world’s, economy, has to now end. We can structure this in ways to protect some proprietary financial information, but we have waited long enough for the Bankers to come in from the cold and show their cards, and we cannot wait any longer as jobs melt away at the rate of 500,000 per month while we need to add 100,000 per month, just to stay even with our population growth.
This Super Federal Entity (let’s call it SFE for now, until the Washington Word-Meisters do their thing and come up with it’s real name) will be a National Bank of Lost Causes. The SFE will hold some stinky assets, flush others down the toilet, and be fully empowered to trade, revise, modify, accept or reject contractual obligations (like a Bankruptcy Judge can, in helping to give a Debtor in Bankruptcy a new start on financial life) and, generally, to wield a big, fat machete to cut down all the weeds so we can finally see what is in there and deal with it already. We’ve waited too long and accepted far too many explanations which are, in the end, just B.S.
Ostriches bury their heads in the sand, presumably, because either they don’t want to see or to be seen, taking a painfully very short and foolish view of things. Our Bankers have been ostriches for too long and, having gobbled up the first $350Billion slug of taxpayer dollars without really pulling their heads out of the sand, we now need sterner measures to get them to stop acting like ostriches. The SFE can pull each Banker’s head out of the sand, one by one, so they can see and be seen again, and will be further endowed with full transparency so that you or I can go to a website and see the numbers daily, aided by a translation for those who are numerically challenged.
Let’s get real, stop talking about it, and do this already – before it is too late and we find ourselves with plenty of time on our hands and living through a Lost Decade, like Japan in the 90’s, to indulge in all the “Woulda, Coulda, Shoulda’s” that we can muster – because there won’t be much else going on.