Obama's lost opportunity

Printed in it's entirety, from Walker Todd:

Obama’s First 100 DaysWalker ToddOctober 3, 2011

The first 100 days of the Obama Administration were a golden opportunity wasted for ending the financial crisis and laying a base for sustainable growth with less governmental subsidy than we actually experienced. 

First should have been a thoroughgoing stress test of the banks on a mark-to-market basis, excluding derivatives (which should not have been spared a full test in the bankruptcy courts), followed by a recapitalization of banks (but not bank holding companies) proven solvent or nearly solvent on a basis analogous to the Reconstruction Finance Corporation of the 1930s. Deposit insurance should have been limited to protecting the payments system and depositors, not large creditors or bank holding companies. The limited recapitalization under TARP was a weak imitation of 1930s policies. 

Next should have been the stabilization of household finances, with across-the-board, fixed-rate refinancing of borrowers as much as 25 percent below zero equity as long as they could prove capacity to maintain debt service on the new basis. The analogy here is the Home Owners Loan Corporation of the 1930s. Elizabeth Warren's consumer protection agency should have been created on a stand-alone basis and given a two-year emergency powers warrant to restructure all credit terms, other than principal owed, for household and consumer credit. 

Finally, a public works program to create jobs after 13 weeks of unemployment would have been preferable to providing nearly two years of unemployment assistance. Between TARP and the first stimulus bill, nearly $1.5 trillion was appropriated. In addition, the Federal Reserve created nearly $1.2 trillion out of thin air to bail out the banking system, much of it for foreign banks, and about one-half of that assistance was issued after Election Day. 

The agenda described here could have been accomplished for probably not more than one-half of the $2.7 trillion marshaled for the policies actually followed. 
We’re not in the end of the world camp quite yet...

The Obama presidency has shown us more than anything the important leadership of FDR in the last century.  We lived under the protection of Depression-era regulations and programs that have been slowly whittled away over the last two decades.  


The other lesson is that we obviously need more pain.