Dean Baker: Obama Gets an 'A' on Health Care; Needs Improvement on Banks

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Obama Gets an "A" on Health Care; Needs Improvement on Banks

By Dean Baker - February 24, 2009, 10:18PM

President Obama reaffirmed his commitment to reform health care tonight. This will be a huge undertaking, which he clearly understands. But, he has repeatedly said that he would make this a top priority and he fully intends to move forward with this process. This is one of those cases where everything will be in the details, but it is very encouraging that he is prepared to devote his time and political capital to this task.

His discussion of the banks did not give the whole story. Yes, the public has an interest in keeping the banks alive, but it has zero interest in rewarding the shareholders of these banks or the executives who brought them and the economy to ruin.

There is a growing consensus within the economics profession that the fairest and most efficient route would be to put the banks through the same sort of receivership process that the FDIC uses all the time when it takes over insolvent banks. For some reason, he has refused to do this even with clearly insolvent banks like Citigroup.

While some have implied that such a takeover would amount to a socialist nationalization, the opposite is true. In a capitalist economy, failed companies go into bankruptcy. Bankruptcy is not appropriate for banks because of their centrality in the economy, but the receivership would be a bankruptcy type arrangement. The banks' books would be cleaned up as quickly as possible and then the restructured banks would be resold to the private sector.

We know why the banks' lobbyists don't want the government to go this route. We don't know why the Obama administration is not choosing this path.

http://tpmcafe.talkingpointsmemo.com/2009/02/24/obama_gets_an_a_on_health_care_needs_improvement_o/