I am not one to get too excited about getting something right when most others were getting it wrong – I’ve been wrong too many times. But based on the weekend news it does look more like Geithner’s plan was much better than the initial reviews indicated. Here’s a video of republican senator Lindsay Graham over the weekend saying we may have to nationalize some banks.
As I mentioned immediately, the key aspect in Geithner’s plan had to do with his “stress testing”. You had to read between the lines, but it seemed to me at the time, and now is obvious to most, that he was talking about nationalizing the banks. He just was not ready to announce which ones. A prudent approach.
On a personal level, as an employee of one of the Too Big to Fail Banks that is clearly insolvent and should probably be nationalized, it will be interesting to go through the process. As the faux Chinese curse goes, “may you live in interesting times”. I am sure we will not all be shown the door. The world economy cannot tolerate another Lehman Brothers fiasco since we really are Too Big to Fail. My bet is that if we do fail the stress test we will be broken up into smaller pieces, at least that would be the right thing to do.