Let's stop pretending the financial system is solvent (or anything but an albatross).I sought him, but I could not find him;
I called him, but he gave me no answer.
—Song of Solomon
* * * * *
Judging by the quality of leadership among community bankers and think tanks — prone to fantasy and denial — the average American has every reason to fear the safety of their bank, whether it be community-based or among the handful too big to fail.
The plan to "agree upon and execute payment of the national debt," as apparently is Kansas City Fed president Hoenig's prescription for restoring lending among community banks, rests upon a similar solution as Alexander Hamilton put forward in addressing the hopeless indebtedness of states — a burden incurred financing the Revolutionary War — such as led to formation of the First National Bank of the United States.
North Jersey Community Bank's Frank Sorrentino can play make believe all he wants, but until the mountain of toxic crap still choking the financial system is written off, there is no way any useful tax reform will assure a desirable pickup in bank lending. Rather, banks will gain capacity to hoard capital with greater haste in their desperate attempt to maintain appearances of solvency. The man's call for stimulating the inflation of still more bubbles is both reckless and irresponsible.
Likewise can William Beach of the Heritage Foundation pretend there are not trillions of insolvent "assets" on the books that were originated via an illegitimate, yet Congressionally-sanctioned Ponzi scheme. These must be dealt with before relatively healthier community banks will find the nation's economic environment conducive to safe and profitable lending.
—Tom Chechatka
0 comments:
Post a Comment