Monday, March 9, 2009

Ken Lewis: We're Not Insolvent! We Promise!

Ken Lewis takes to the Wall Street Journal to tell us to pay no attention to that man behind the curtain.

Lewis assures us that "the vast majority of banks will weather this storm" and that nationalization is misguided, because its "announcement would undermine confidence in the financial system and send shudders through the investment community."

Undermine confidence in the financial system? Really? As Paul Krugman would ask, what's the weather like on his planet? Trillions of dollars of credit losses worldwide has destroyed confidence in the financial system. Paying billions of dollars for the right to absorb Countrywide and Merrill Lynch's billions of dollars of losses has crippled confidence in Lewis's BoA. Nationalization only raises the specter that creditors won't be made whole. That could create a renewed panic among holders of unsecured bank debt, but if there's an orderly process it should be a tractable problem. At this point, nationalization might be the only way to convince the public that banks are actually healthy.

So nice try Ken. But you're not distracting anyone from the real question at hand: why do you still have a job?

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