The Only Way to Save the Economy is to Break Up Insolvent Banks In an Orderly Manner

The Congressional panel overseeing the bailout is blasting the government’s approach, saying that the government has to close insolvent banks. Some quotes from the panel’s new report:

All successful efforts to address bank crises have involved the combination of moving aside failed management and getting control of the process of valuing bank balance sheets…

[Bank liquidation would be] least likely to sap the patience of taxpayers [and] provides clarity relatively quickly [to the markets]….

Allowing institutions to fail in a structured manner supervised by appropriate regulators offers a clearer exit strategy than allowing those institutions to drift into government control piecemeal.

(see this).

The following experts agree that the insolvent banks should be liquidated to save the broader economy:

  • And many others on both the left and the right

The choice could not be more clear: Break up the insolvent banks in an orderly manner, or the economy will not recover for many, many years.

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