Michael Lewis and David Einhorn had two op-eds in the New York Times: one was long and the other is lo-o-o-ong. The lo-o-o-ong one is titled The End of the Financial World as We Know It, and it explains why greed is the least of the causes for this collapse. The long one is How to Repair a Broken Financial World, which sets forth some well-considered suggestions.
I think you should read them both. But if you don't, here are the suggestions I'm particularly fond of.
If a failing firm is deemed “too big” for that honor, then it should be explicitly nationalized, both to limit its effect on other firms and to protect the guts of the system. Its shareholders should be wiped out, and its management replaced. Its valuable parts should be sold off as functioning businesses to the highest bidders — perhaps to some bank that was not swept up in the credit bubble. The rest should be liquidated, in calm markets. Do this and, for everyone except the firms that invented the mess, the pain will likely subside....
Congress might grant qualifying homeowners the ability to get new government loans based on the current appraised values without requiring their bank’s consent. When a corporation gets into trouble, its lenders often accept a partial payment in return for some share in any future recovery. Similarly, homeowners should be permitted to satisfy current first mortgages with a combination of the proceeds of the new government loan and a share in any future recovery from the future sale or refinancing of their homes. Lenders who issued second mortgages should be forced to release their claims on property. The important point is that homeowners, not lenders, be granted the right to obtain new government loans. To work, the program needs to be universal and should not require homeowners to file for bankruptcy....
Stop making big regulatory decisions with long-term consequences based on their short-term effect on stock prices....
End the official status of the rating agencies....
Impose new capital requirements on banks....
Another good solution to the too-big-to-fail problem is to break up any institution that becomes too big to fail....
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Ya think this would be a
Ya think this would be a given. Or am I from an other planet?
Truth...you can only see it
Truth...you can only see it if you come straight at it instead of trying to work an angle.