There is an article in the WSJ that talks about just creating "Good" banks. There is plenty to read in the article, but I only wanted to quote one line:
"Romer suggests using government capital to create new, healthy banks that can essentially compete with the existing banks"
You mean as opposed to just using government capital to compete against existing banks? The small banks must be chomping at the bits with all this government money propping up the large and insolvent which then goes to compete against them. How/Why do they enter the marketplace when this is going on? These smaller banks did not abuse leverage, nor loaded with off balance-sheet bombshells because they have stuck to the tried and true methods of 3-6-3 banking. That would be borrow at 3, lend at 6, be on the golf course at 3.
We've also heard Obama downplay taking the Sweden approach because they only had a handful of banks whereas we have thousands. Well, only a handful of ours represent 90% of the problem so nationalizing those would go a long way in stopping this malignant cancer from spreading (if that's even possible).
