Saving the Banking System in Four Easy Steps

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I think the term "Toxic" negates the term assets unless liquidated ergo simply auction them off and reregulate to stop the bleeding. We cannot hold everyoe's hands forever, there mut be losers in this world else everyone loses!!!

Ray Fisher of NM 12:05PM February 17, 2009

Wow, Tony Lee has quite eloquently described a macro laymen's version of American Capitalism and financial markets in a nutshell.
However, it was a very shallow analysis of why Vikram Pandit's solution won't work, nor did he offer any solutions. Forecasting "it is bad" and "who knows how much worse" are a couple of years late, and offer no insight towards a solution.
I think Pandit's idea has merit. I also offer that perhaps we consider wether we should continue to allow unregulated gambling via the derivatives market. Banks and underwriters are financial institutions, not bookies.
See: http://seekingalpha.com/article/117312-derivatives-and-bank-collapse-the-scam-that-went-largely-unreported

Nate Emery (Faisal's Dad) of VA 4:00PM February 15, 2009

Let's see.....The national debt of the US and all of their unfunded liabilities is around 65 trillion dollars using Generally Accepted Accounting Practices. Thats more than the world's GDP! I thought I read the title of the article to be saving the banking system in four easy steps? Is the writer stupid? Four easy steps?
I've got some land I want to sell you. I swear that if these Obama kool-aid drinkers had an IQ that was one point lower, they would be rocks! If they were a bag of hammers they would at least be useful, but a rock?

jeff of WI 7:13AM February 15, 2009

do what Sweden and UK did and buy the banks in trouble. Then restructure and break these big banks up.Invest in small town banks.By the way seeing that CITIBANK and BANK OF AMERICA is putting money into lobbying against the free choice act ANY & ALL UNION MEMBERS should PULL THEIR MONEY OUT OF THESE BANKS.POWER OF THE PEOPLE NEEDS TO NOW PREVAIL

linda of IL 8:53PM February 13, 2009

Banking, insurance and wallstreet are predicated on a "house of cards" and function as legitimized "Ponsi" schemes. Banks hold in reserve around 3% of deposits. Stocks, corporate bonds and securities are sold at 50 times valuation of actual hard corporate assets. New comers pay the interest rates and dividends with their new cash injection (bank deposits or stock/bond purchases). These schemes are predicated on the supposition (and hope) that the demand for settlement will be far outweighed by new infusion of cash, as follows:
1. Cashing out by bank depositors is less than their liquid assets, including their 3% reserves... causing a run on the banks that leads to banking collapses.
2. Stock market investors will invest for the long haul and not sell their shares in masse during a bear market, thereby contributing to a downward spiraling of stock values.
3. Insurance companies who invest in Wallstreet, real estate projects and other dubious schemes hope the number of people who die is by far outweighed by new insurance premiums that are used to pay death benefits.
As a people, we should have paid better attention to our teachers during the story about "Humpty Dumpty"... when he fell off the wall, not the Kings men could put him back together again.
Sadly to say, the economic downturn has not bottomed out because people have lost confidence in the banks, Wallstreet and in the feds. The GDP is in large part based upon consumer spending (~40%), government spending (~30%) and investment income (~30%). What we see is a severe lost of confidence in every sector that comprises the GDP. Lower consumer spending lowers taxes and government spending. Lower consumer spending lowers the cash flow of businesses and reduces corporate valuation of assets, and their Wallstreet values decline as less investors are willing to buy at normative stock prices. The nexus of the failings in all 3 sectors foretells a continued spiraling down until the economy hits bottom... where that is no one dares say with any authority.

Tony Lee of CA 2:32PM February 13, 2009

5) Do NOT give any more home loans to illegal aliens.
6) Eliminate the Community Reivestment Act and other social engineering schemes.

High FICO guy of NV 2:13PM February 13, 2009

As long as everybody in the world knows the terms and details and there are no "secret" valuations. If the world market can know the truth and still bid confidence upward, then this indeed is a brilliant idea.
If it depends on real investors and citizens being deceived in any way, then it isn't.
I'm not a fan of mark-to-market, but we MUST insist now on transparency.

Muser of NM 1:19PM February 13, 2009