The Wall Street Journal just came out with a piece outlining a multiple-choice hairball of options which Treasury Secretary Geithner is considering. The sad truth is this: his plan will fail. Why? Excessive complexity. For a plan of this magnitude to work, it needs to be straight-forward, easy to understand, clearly communicated, brutally transparent, and ruthlessly executed. The chance of the Treasury and Congress arriving at a plan that meets these criterion appears to be approaching zero. Further, the plan is still missing a few key components, such as transparency of bank asset values and avoiding the forced requirement to lend money, flying in the face of rational decision-making and market forces.
But wait, it gets even better. Consider this comment from Rep. Brad Miller, a Democrat from North Carolina and a member of the House Financial Services Committee:
“If we had regulators go in an examine the books like we did at Fannie Mae and Freddie Mac a great number of our systemically important financial institutions could be insolvent.”
And this is exactly what Mr. Miller and Treasury Secretary Geithner want to avoid; the transparency necessary to figure out exactly where the industry stands, in order that a proper prescriptive can be put in place to begin real healing, not some illusory band-aid that will only set us up for greater suffering down the road. For a member of the House Financial Services Committee to make a comment like this only highlights the disconnect between the politicians and the real problem: dealing with the systemic insolvency that threatens our country. Mr. Miller would have you believe that putting our collective heads in the sand is a better approach. He is just so wrong.
He knows the problem is there, but is unwilling to face into the truth. He thinks we can’t handle it. Reality is, we can handle the truth: it’s he and his scared-out-of-their-minds Congresspeople that can’t handle the truth. We need some different people making the big decisions. They appear too big and too important for our small-minded Congresspeople to make.