Fixing Banks Ain’t Easy
In a NYT column, Tyler Cowen argues persuasively that none of the “simple” solutions floating around, ranging from nationalization to bankruptcy to the Swedish Plan are likely to work in fixing America’s “bank holding companies.” But, while I’m as capitalistic as the next guy (if, say, I’m sitting between Dan Drezner and Megan McArdle) I had to chuckle at this:
On top of that, the government doesn’t have the expertise to run large bank holding companies like Citigroup. There is the danger that caretaker managers, with bureaucratic incentives, will never return the banks to profitability. And restrictions on executive pay, already enacted into law, will make it hard to hire the necessary talent.
Dude: The talented people attracted by massive salary and benefits packages didn’t seem to have the expertise, either.