more than a modest proposal...

[acroyear]

I, Cringely . The Pulpit . Off With Their Heads! | PBS:

Enough of this crap. What if Jack Welch was the U.S. banking czar? [...]

Right now all the bankers are afraid to lend money because they are afraid of failure. As the new banking czar Jack [Welsh, of GE] would much rather have them be afraid of HIM. If the bottom 10 percent of bankers were fired every year and the bottom 10 percent of banks had their branches and deposits redistributed, wouldn't they be more afraid of THAT than of making bad loans? Their motivation would still be to make GOOD loans, but the penalty for making NO loans would be there, too.

Our problem then is that we're throwing money at something we should be handling using a different regulatory tool -- licensing.

U.S. bank regulators should go to all the banks this afternoon and say, "You aren't making loans, which is part of the definition of what it is to be a bank. If you aren't acting like a bank by tomorrow we'll take away your banking license and transfer your deposits to another bank that WILL make loans."

Problem solved overnight.

It's only one part of the problem, of course, but this solution will cost a lot less than $700 billion. It will cost nothing.

And if you think it won't work, then you don't know Jack.

Certainly, the commenter criticize Cringely for simplifying Jack's approach (and not noting that beyond a certain point, cutting 10% is no longer cutting "dead weight"), but it does have a point - nobody's lending money out of fear, but activing lending money, especially the short-term loans that Wall Street depends on, is the only thing that is going to at least cushion the system away from the paralysis that will guarantee a real crash.

But of course, that's regulation, which is a more dreaded R word than recession, even though it's the only thing that'll help rebound from one.