I’ve been talking a lot over the last couple days of the folly of buying back the banks’ ‘toxic assets’ in order to relieve them of the consequences of their bad decisions and get them back to the regular business of being banks. Mind you, my idea is not that we should let the banks collapse. I think there’s likely no alternative but to spend a lot of public money to stabilize the financial system. My beef is that we appear likely to fund the banks through what is effectively a bankruptcy proceeding while still allowing the current owners to remain the ones who own these institutions. And that doesn’t make sense to me. Now, this morning TPMDC’s Elana Schor spoke on a number of topics with Rep. Barney Frank, who is not only Barney Frank but also Chairman of the House Banking Committee. You can see the different portions of the interview in several posts at TPMDC. But I wanted to focus on this passage in which Frank talks about this issue precisely.
The gist of Frank’s comments are that he thinks it might simply be necessary but that the argument he is making within the counsels of power is that if ‘elites’ want the public to pony up their money in cases like this, they, the aforementioned ‘elites’ need to get serious about repairing and expanding the social safety net in the country …
