Paul Krugman makes a couple excellent points critical of the Obama administration's handling of the the banking crisis. If there are insolvent banks, then announce it, nationalize them and let's move on.
Gerry Seib makes the case that while most of Mr. Obama's constituency may not be investd in the stock market, the continuous draining of wealth from our capital markets is doing irreparable harm. Broad market indices are down over 10% since Obama has taken office and are now down to 1997 levels. Financial stocks are down 50% since January 1st !!!
Glenn Greenwald is critical of the Obama administration's use of anonymity to float controversial ideas, which has been a cynical tactic of previous administrations, and has factored into the Treasury Department's lack of a plan in the current crisis.
I realize that if President Obama had come in on day one and nationalized two of the world's largest banks we would have heard from the "I told you so" crowd about his socialist agenda, but at some point a president needs to do the right thing. The stock market is suffering from the broad brush being used to paint all financial institutions as bankrupt. Surely at least one bank is solvent, no?
Thursday, Northern Trust (NTRS) of Chicago announced that it will pay back the TARP funds it received in order to remove the constraints placed on its operations. Regardless, the stock dropped over 3% since that announcement.
The 'stress tests' that have been floated by Treasury to answer these questions about which banks are solvent need to be completed, like, yesterday. If all banks have engaged in destructive leveraging of assets and are inoperable as going concerns, then stockholders and taxpayers have a right to know as soon as possible. If only some of the nation's banks are insolvent, then likewise we need to have that information.
By any measure Mr. Obama has accomplished a lot in his first 50 days as we all know how much has been neglected the last eight years, but I find it disheartening that Mr. Obama has spent an inordinate amount of time discussing how he will decrease home mortgage deductions while ignoring the lack of transparency in the capital markets. The ongoing damage to the credibility of the stock market is real and long-lasting; do you really think Joe Sixpack is coming back to his 401(k) after this disaster?
As Krugman intimates, dithering time is over.