Overreaction to Banking Crisis is Uninformed, Vengeful, Costly
The over reaction to the banking crisis has moved from utterly uninformed and vengeful to very costly for the economy. The run-up in housing, starting with the exemption of house capital gains up to 1/2 million dollars in 1997 until it peaked out in 2006 and collapsed; the associated litany of both public and private excesses, proved that there was more than enough blame to go around, including but not restricted to the banks. Bankruptcy and restructuring was the solution for… the banks just as much as for Countrywide and others that took their risks, failed, and needed to be washed out of the system and their resources reallocated. That was the bank fix, then you bloody leave them alone to make loans and get the economy going. We did not do that, and guess what we are still stuck. What the government learned from the crisis is to punish the banks forever, not solutions from which all can gain.