Speaking the truth

It looks like some people in Washington are ready to face reality when it comes to the banks.

April 8 (Bloomberg) -- A congressional panel overseeing the U.S. financial rescue suggested that getting rid of top executives and liquidating problem banks may be a better way to solve the economic crisis.

The Congressional Oversight Panel, in a report released yesterday, also said the Treasury may be relying on too rosy an economic scenario to guide its $700 billion bailout, and declared that the success of the program after six months is “mixed.” Three of the group’s members disagreed with at least some of the findings.

“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,” the panel, headed by Harvard Law School Professor Elizabeth Warren, said in its report.

I do not understand why Geithner in particular and the Obama Administration in general are so opposed to clearing out the bank executives and temporarily nationalizing the banks. The faster the bank issues are unwound, the better for everyone. Trying to make the process less painful for Wall Street only makes it more painful (and expensive) for you and me.