Chrysler vs. the Big Banks?
by Tom on May 4, 2009
in Market Musings, banks
Barry at the Big Picture has an interesting analysis of the Chrysler situation and how Chrysler’s bankruptcy very well might impact the banks who “fail” (and I use the term loosely) the government stress test…..
Read the entire article, but here’s some “highlights…..”
Tom
How Will Chrysler Bankruptcy Affect Insolvent Banks? | The Big Picture
The Chrysler bankruptcy is a fascinating development in the great financial crisis of 2008-09. It may be a enormously significant milestone in the evolution of the banking crisis and the response from the Obama administration.The bank stress tests will be out in days, and the need for private capital will be a turning point. Rumors that Citibank needs $10B and Bank of America needs $60B are circulating. The public has been infuriated at all the monies going to the banks, but they still mostly blame W. If the post panic Obama admin wants to make a break from those policies, forcing the banks to raise private capital or go into FDIC liquidation is the way to do that.
Or,they can continue the Bush policies — a surefire way to “own” the mess they inherited.
Are banks really so different than automakers? So far, the answer has been yes. The policy response has been to pour trillions of dollars into the companies that caused the problem. Perhaps we have finally reached the point where these horrifically expensive, wasteful policies will come to an end.
That would be change we can believe in . . . .
