Monday, February 9, 2009

How to fix the banks and the financial sector



My plan:

a) Eliminate mark-to-market asset pricing for all commercial banks
b) The Fed should lend open-ended, without limit and uncollateralized to all commercial banks as needed
c) FDIC guarantees all deposits, without limit
d) Eliminate all gov't help to non-bank intermediaries and let most fail

Result: Commercial banks resume role as credit conduit between gov't and private sector. Non-bank intermediaries go away along with real economy's dependence on this structure.

4 comments:

googleheim said...

how do you ensure that there is not any linkage between non-bank intermediaries and banks such that when the non-banking mediums tank into the sea that they don't pull anyone else down ???

Mike Norman said...

If the Fed stands ready to lend on an uncollateralized basis to commerical banks, then even if there are links, which I'm sure there are, it shouldn't pull the banks down.

Billy said...

Mike made a comment last week on labels on the segments

If you are looking at the podcasts in itunes there is a description of what is discussed in the segment in the description field.

Billy

Mike Norman said...

Thanks, Billy!