Thursday, November 20, 2008

The Alfidi Plan to Solve the Banking Crisis

The most effective solutions are sometimes the simplest. I am convinced I can solve the banking crisis. Here's my solution, from a comment I posted to Clusterstock today:

Here's something big they could try.

Force every ailing firm, regardless of size, to immediately mark all MBS to market. Those that go bankrupt are immediately sold to healthy institutions even if that means a foreign bank or your local firefighters' credit union can buy Citigroup.

Shareholders are completely wiped out. Senior debt holders become new equity holders at 20 cents on the dollar or less. TARP money is used as the equivalent of DIP to keep banks running during reorganization (prevents credit market seizure). FDIC personnel can run the retail outlets even if they have to hire temps (lots of laid-off Wall Streeters can be bank tellers for a couple of months).

Voila. The system is saved. Feel free to quote me.

See, I'm as good of an artist as I am a critic.