The Bad Bank Proposal

We have been hearing about this for a while. We had suggested this a few months ago along with several other elements. Specifically:

1. A New Bank of the US: AKA The Bad Bank, which would buy up certain assets for cash and then resell them at some future time.

2. Insurance: The Bank of the US or whatever would provide an insurance policy like the swaps and would then allow stability on the less than bad stuff.

3. The US would take secured equity positions for a time certain in any entity it invested in to hedge the risks on the downside. There would be a call provision to call back the equity into cash at some time certain or the bank would default and the Government would "sell" the asset.

4. All employees of the banks so obtaining US funds would have salaries capped. The fear of losing them is countered to where would they go! Frankly the better ones had gone to Hedge funds years ago and the ones left on Wall Street were the arrogant dummies. Noting worse than that combination, just look at Washington.

5. Apply the tax policy we suggested; zero corporate for all non-financials and zero capital gains for the same. This would drag investment to the US with great speed.

6. Abandon the massive redistribution of dwindling tax revenues! Now.