Former FDIC Chief on TARP

[Smiling Assassin27]

Lo and behold, more and more people are coming out with this position--a position that some had from the very beginning--and no, none of the 4 idiots running now were one of them.

In retrospect, the mammoth assistance to those big institutions seemed like overkill. I never saw a good analysis to back it up. But that was a big part of the problem: lack of information. When you are in a crisis, you err on the side of doing more, because if you come up short, the consequences can be disastrous.

The fact remained that with the exception of Citi, the commercial banks’ capital levels seemed to be adequate. The investment banks were in trouble, but Merrill had arranged to sell itself to BofA, and Goldman and Morgan had been able to raise new capital from private sources, with the capacity, I believed, to raise more if necessary.

Without government aid, some of them might have had to forgo bonuses and take losses for several quarters, but still, it seemed to me that they were strong enough to bumble through. Citi probably did need that kind of massive government assistance (indeed, it would need two more bailouts later on), but there was the rub. How much of the decision-making was being driven through the prism of the special needs of that one, politically connected institution? Were we throwing trillions of dollars at all the banks to camouflage its problems? Were the others really in danger of failing? Or were we just softening the damage to their bottom lines through cheap capital and debt guarantees?

Granted, in late 2008 we were dealing with a crisis and lacked complete information. But throughout 2009, even after the financial system stabilized, we continued generous bailout policies instead of imposing discipline on profligate financial institutions by firing their managers and boards and forcing them to sell their bad assets.

The system did not fall apart, so at least we were successful in that, but at what cost? We used up resources and political capital that could have been spent on other programs to help more Main Street Americans. And then there was the horrible reputational damage to the financial industry itself. It worked, but could it have been handled differently? That is the question that plagues me to this day.

http://finance.fortune.cnn.com/2012/...ir-bull-horns/

[TonyR]

So who are you blaming? Who should we be mad at?

[Blart]

I blame the finance wizards who brought us the crisis.

[ghwk]

In before Lonestar and DBruleu to say it was the poor minorities who had no business taking out a home loan.

[L.A. BRONCOS FAN]

^

And before their candidates tell us how we can balance the budget by giving even more tax cuts to the wealthy, increasing defense spending, and making cuts to programs that represent ~1/3 of the budget.

[Blart]

Originally Posted by ghwk

In before Lonestar and DBruleu to say it was the poor minorities who had no business taking out a home loan.

It's those evil poors again, up to no good!

[TonyR]

Originally Posted by TonyR

So who are you blaming? Who should we be mad at?

Hello? Still waiting for the OP to answer this very simple question. You posted the thread so you must have it all figured out, right?

[BroncoInferno]

Originally Posted by TonyR

Hello? Still waiting for the OP to answer this very simple question.

SOP for SmilingAss. You'll probably keep waiting. The guy comes in once or twice a week and carpet bombs the WRP forum with his BS, then when his arguments and premises are inevitably b****-smacked by someone wielding facts, he disappears like a coward.

[houghtam]

Originally Posted by BroncoInferno

SOP for SmilingAss. You'll probably keep waiting. The guy comes in once or twice a week and carpet bombs the WRP forum with his BS, then when his arguments and premises are inevitably b****-smacked by someone wielding facts, he disappears like a coward.

Just like barryr and epicdramanyuk4tw.

[elsid13]

It is always easier to look back at a crisis and figure out what you could have done better. That why you do hot washes to learn from both your success and your mistakes. It is important to remember what the environment was and all the pressures and cries that were occurring during that decision process. In an ambush it is better to act then do nothing.

[Rohirrim]

Granted, in late 2008 we were dealing with a crisis and lacked complete information. But throughout 2009, even after the financial system stabilized, we continued generous bailout policies instead of imposing discipline on profligate financial institutions by firing their managers and boards and forcing them to sell their bad assets.

This is what I was saying since the beginning: Fire the bastards and replace their boards. And after investigation, indict a bunch more of them as well for fraud. This is the number one reason that Obama does not have my vote. The biggest ponzi scheme in history, and nobody goes to jail.