Steve Sailer's modest proposal to improve the investing and lending climate in America: force the banks to publish all their securities holdings on the web.
The other problem is something the government might possibly be able to help with. And that is that it's currently prudent to assume there is a high probability that any financial institution you might want to deal with could be broke because their books are black boxes, especially the mortgage-backed securities they own. So, you don't want to invest in them or lend them money because you don't understand their financial position. This uncertainty over the value of financial instruments linked to mortgages can make things even worse than they really are -- All we have to fear is fear itself, etc.
So, it's time for the government to open up the black boxes by requiring all parties to mortgages, mortgage-backed securities, and derivatives tied to mortgage-backed securities to post everything on line. Privacy be damned.
We taxpayers are on the hook to guarantee the deposits in all the banks. So I think this gives us the right to know how they are putting our money at risk. I also think this increased transparency would have salutary effects. Thinking about buying stock in Bank Of America or Wells Fargo? You have no idea how much trouble they are in because they hide too much. Rational stock analysis for these companies isn't possible that I can see. Some might be far better than others and deserving of much higher stock market values.
Also, I want the transparency because I want to know whether the US government is bailing out shareholders of failed banks. Which securities does the government buy from CitiBank versus from JP Morgan Chase versus Bank of America? What's the market price of the securities purchased from these banks?
|Share |||By Randall Parker at 2009 February 11 10:52 PM Economics Credit|