Banking Sector Band-aids Just Won't do It

We all know by now that the U.S. banking sector is badly broken. The real question is what to do about it. I think a few core principles need to be followed when devising a plan for healing the banking sector: Long-standing rules governing bank ownership shouldn't be compromised in a panic; and Bank balance sheets won't heal unless deep pain is felt, and preferably as quickly as possible. Bank Equity Holders: Out of Luck Investors in junior securities, be they common shares, preferred stocks or subordinated debt, enjoy premium returns in the good times and bear disproportionate risks in the bad. They should not have a seat at the table in a bail-out scenario. When considering the plans put forth for rescuing the GSEs - Fannie Mae and Freddie Mac - I do not want to see Treasury Secretary Paulson spending my tax dollars... [read full story]