Viscerally Bad Banks

CNBC's Steve Liesman announced yesterday that the "Good Bank, Bad Bank" idea was gaining momentum. In its essence, the government will purchase the toxic asset on the balance sheets of the world's largest banks. They will pay more than these assets are worth on the open market, because if they didn't, all these banks would go bankrupt. They will use "models" to determine these prices. These models will almost certainly be devised by the very folks who priced them badly three years ago. And once again, I'd bet all my nachos that they're going to get it wrong on their second go-around, too.

Regardless what you have heard on TV or read in the newspapers, this idea is not a mulligan for everything bad that happened between 2005 and 2007. It doesn't make the problem go away. It just makes their problem our problem. It means that you and I get to take responsibility for all the mistakes that happened between 2005 and 2007, and the big, well-connected banks get to go on doing what they've always done, which is to make crap-tons of money. We get to be the bad bank, and those arrogant swindlers who gave themselves insane bonuses over the past five years at Goldman and JP Morgan get to be the good bank. Yes, I'm angry. Yes, I'm jealous. Because it's unfair to everyone who acted wisely and played by the rules. (It helped my portfolio, as I kinda saw it coming, but that makes me no less upset.)

I'll give my money to help the poor. I'll give my money to heal the sick. But it makes me want to stab my own eyes out with a spoon when I know that a cent of my hard-earned income is going to sustain the unsustainable practices of the arrogant and foolhardy souls at these banks. They made reckless/negligent/fraudulent (pick one) decisions, and we have given them a blanket pardon.

I voted for Barack Obama. He ran on a platform that those who are most fortunate should help those who are least fortunate. I'm down with that. But this decision creates a different dynamic: those who are most responsible are paying for the sins of those who were least responsible. That's a dynamic I don't like. That's a dynamic that must change, or he will not get my vote a second time.

Puke.