Given the mistakes made on Wall Street and the sheer size of the financial losses, one would think that Congress would take a tough line on the banks: wipeout shareholders, remove incompetent management and close down the zombies. But as Paul Krugman laments, this is not what the government is doing:
"...what they’re actually doing is underestimating the problem, doing too little too late, and not being open and honest in trying to assess the true cost. The actual plan seems to be to keep the banks semi-alive by implicitly guaranteeing their liabilities and dribbling in money as necessary, all the while proclaiming that they’re adequately capitalized — and hope that things turn up. It’s Japan all over again.
And the result will probably be a deeper, long-lasting crisis."
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