I am writing to you again about the Paulson-Geithner-Potemkin plan for shoveling taxpayer money into fundamentally insolvent banks.
A number of smart people, including Paul Krugman, have suggested that maybe the administration's plan for the banks is merely a Trojan horse, and that once the "stress tests" have been conducted, the administration will be in a position to place the worst banks into some type of receivership.
Unfortunately, comments released today indicate that the stress tests are phony and the outcomes are predetermined.
I think President Obama has done a pretty good job in most areas, but I am worried that we have reached a point where the ever-changing bank plan is not credible enough to serve even as a Trojan horse.
Congress must make clear to the administration that no more TARP-type funds will be made available. The big banks are holding large numbers of worthless securities, and these securities cannot be made valuable by wishful thinking.
No more large cash infusions should be made to any bank unless shareholders are wiped out, management is removed, and the bondholders take an appropriate haircut based on the actual investment losses. This is the only plan that can work, and it is the only plan that you can ever get a majority of Americans to support.
This letter is intended to be public domain, and any part of it may be used for any purpose.