lundi 7 décembre 2009

Barry Ritholtz for the Swedish model

Reprise verbatim d'un extrait de ce post de "The Big Picture". (il dit que la voie du laxisme comptable et de la sauvegarde des banques (modèle japonais) était une erreur par opposition aux nationalisations/restructurations (modèle suédois) qui auraient dû être réalisées)

This is why the Japanese model of saving banks, versus the Swedish model of saving Banking, was such a poor choice.

Banks are currently operating in a survival mode: They are hording capital, not lending, making decisions based on their needs. It is what they are supposed to do, and anyone surprised by this does not understand how coprorate entities make decisions or operate.

It is the reason why throwing billions of dollars are banks in the first place was the wrong decision: We should have followed the Swedish model. The FDIC should have put insolvent banks into receivership; they senior management is replaced, the shareholders wiped out, the debt written down to zero. The assets — the bad paper, the accounts, the healthy parts of the bank — gets sold off or spun out as a new public entity. It is adequately capitalized, without crushing toxic assets and piles of leveraged debt.

What we would have gotten for out trillions of taxpayer dollars was a well capitalized, low leveraged, low debt financial sector, capable of making loans and driving the economy forward.

Instead, we have a grievously wounded banking sector, clinging to its cash, fighting to survive, economy be damned.

How long will we be locked into this ineffective paradigm? This is the ill conceived plan of Hank Paulson, Ben Bernanke and George W. Bush during the panic months of late 2008/09. That ill thought out approach was bad enough; making matters worse is the fact that the same failing approach has been embraced by Tim Geithner, Larry Summers and Barack Obama.

The sooner we admit that TARP was a disaster and that the financial sector remains a debacle, the sooner we can get rid of the horrific Japanese model.

The Swedes brighter banking system beckon . . .

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