I recently read a 13 April 2009 Barron's interview of William Black, an S&L crisis veteran. Black discussed our current financial crisis and Michael Panzner at Financial Armageddon, cited the interview. I have nothing to add to Black's comments. Here's a link: http://www.financialarmageddon.com/2009/04/too-naive.html.
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"The current law mandates prompt corrective action, which means speedy resolution of insolvencies. He (Geithner) is flouting the law, in naked violation, in order to pursue the kind of favoritism that the law was designed to prevent. He has introduced the concept of capital insurance, essentially turning the U.S. taxpayer into the sucker who is going to pay for everything. He chose this path because he knew Congress would never authorize a bailout based on crony capitalism.
Geithner is mistaken when he talks about making deeply unpopular moves. Such stiff resolve to put the major banks in receivership would be appreciated in every state but Connecticut and New York. His use of language like "legacy assets" -- and channeling the worst aspects of Milton Friedman -- is positively Orwellian. Extreme conservatives wrongly assume that the government can't do anything right. And they wrongly assume that the market will ultimately lead to correct actions. If cheaters prosper, cheaters will dominate. It is like Gresham's law: Bad money drives out the good. Well, bad behavior drives out good behavior, without good enforcement."
Amen Mr. Black...
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