Unknown Investor

Nationalizing Bank Losses

I have an idea that can help resolve the problems facing both our economy and financial industry. Front lines reports from academia, government, and the media explain in good measure that banking industries uncertainties and fears regarding asset viability on their own and others balance sheets have created immovable road blocks to reasonable distribution and capital access.

The idea seeks to collapse the period of time to which a more predictable and reliable flow of capital through our system can be arrive at; it cannot in and of itself resolve all systemic problems. The limited and uncertain access to capital has in large measure hobbled our collective economic system; interested parties to productive assets have been beset by a vicious cycle of pessimism and diminishing valuations, many times leading to a complete loss to owners and counter parties. The recommendation is designed to impose upon the banking system requirements to fully deploy their capital, with the aim of arresting this downward cycle and arriving at the nexus where collateral valuations are affirmed and once again become a measure of strength and not weakness.

The basic tool and in this solution is taxation. A new piece of legislation is to be formed in which banks are taxed when not meeting the required leveraging minimums, and somehow rewarded when they demonstrate full leveraging deployment. Despite the cajoling of the Feds and Treasury after massive capital injections and asset swaps, the banking industries collective uncertainties are preventing their raison d'être, banks continue to under deploy and hoard capital, this is where we are collectively bogging down.

As commercial banks comply with new leveraging requirements, they deploy capital to the most favorable credit risk. A new competitive lending environment will spring forth; banks will compete with other banks to actively seek out the best risk reward borrowers for their offerings, or be subject to this new Federal tax or penalty. This new velocity of money will energize our economy, restore asset predictability and grow balance sheet valuations without further deficit spending.

This novel catalyst along with other primers will reduce the distance and time that the wheels of Capitalism need to travel before growth and optimism is restored; preventing unneeded failures, losses, and human hardship due to degrading asset valuations and capital deprivation.

Let the chip fall where they may there after. A forced renew will have begun.