Create a “good bank”

An oxymoron for out time?

Joseph Stiglitz recently defended a bank nationalization program. He made his defense on the grounds that many banks are now insolvent, that transparency is lacking, that funding a bailout program such as the Bush and Obama administrations have will necessarily be too costly for the taxpayer and, finally, that the costs specific to any resolution to the financial crisis should be paid by the bankers and shareholders, not the taxpayers. His solution: Create a "good bank" by stripping the viable assets from the banks known to be insolvent, thus leaving the diminished banks with a project of making do by peddling their trash on the market.

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