So why don’t Obama, Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke force the banks to write down their troubled assets first, as a condition of government assistance? We can only speculate, because their explanations so far have made no sense.
Perhaps they’re scared the markets would panic if large, insolvent financial institutions started telling investors just how undercapitalized they are. There’s the distinct chance some of Obama’s advisers are beholden to failed banksters, because they used to work for them and may want to do so again someday.
There also could be a manpower problem. The government might not have enough employees to seize all those sickly banks and supervise the process of winding them down. Probably, it’s some combination of those and other factors.
I for one believe that worries of market panic are the primary contributing factor, with a lack of manpower/practical ability to act quickly on the scale needed playing a major role.
What remains to be seen is whether the "stay the course" message we're hearing now is in fact a result of political stubbornness/self interest (unlikely, I think... I continue to believe that Obama is a President truly interested in acting in the best interest of our nation), or whether their insistence on keeping that particular curtain closed from the American public suggests their intimate knowledge of the monster that sits behind it.
If that's the case, the true transparency that many are calling for could lead to a situation easily capable of growing beyond the administration/FED/Treasury's ability to control it, with disastrous consequences. But as it seems more and more like the administration's moves are at best a stalling tactic with no ground up solution in the works, those same consequences could just be a matter of time.
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