Bank Failures and Other Grim Tales

Our grim story continues and Megan is doing a yeoman’s job of chronicling it and offering insight. But I am becoming less enthused about the bailout plan. Yes, I understand that we want to avoid bank failure, but that doesn’t mean we want to allow every single bank to survive. I’d be rather happy to see poorly run banks replaced by well run banks. Not all bankers feel this way, for obvious reasons.

The dilemma is this: we don’t want to reward bad behavior by bankers or home buyers, but we don’t want pain to be inflicted on the innocent as well. No one has figured out a way to do this. Watching the clown convention called Congress, it seems unlikely that a good idea will materialize. We’re all going to have to take the medicine, whether we’re sick or not. The only question is whether it’s a sudden one time one year shock therapy or a decade long torture by a thousand cuts. But, rest assured, Congress is on the job, so we’ll probably get the worst of both worlds.

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