Legal Commentary

The Stress Tests

By Big Tent Democrat

NYTimes Editorial:

If they are credible, the stress tests will finally provide the information the government needs to deal forcefully with the banking mess — assuming the White House also has the will to do what is needed. . . . If the capital shortfalls are severe, . . . it is all but certain that private capital will not be forthcoming. The government should act quickly to plug the holes. . . . The administration should . . . recapitalize the banks. And it should take temporary control if that infusion results in a majority stake.

[MORE . . .]

The banks’ current executives would be fired, shareholders would be wiped out and bondholders would take a haircut. But that is the best way to ensure that the banks’ finances are quickly and efficiently restructured, and the taxpayers’ investment is protected. . . . If the tests have been rigorous, the White House has the information it needs. Now the question is how it will use it.

Who believes Geithner will do this? Count me among those who do not. It is up to Congress to demand real action from the Obama Administration on the banking crisis. On this issue, the Obama Administration has been an abject failure.

Speaking for me only

Full post as published by TalkLeft on April 26, 2009 (boomark / email).