The stock market opened up 200 points in New York this morning after it closed down more than 700 yesterday after that dreadful plan went deservedly down in flames. The House of Representatives did the right thing in voting that blatant power grab down.
But what to do? That’s the question. There are a few options:
- Nothing. In this option, Congress doesn’t do anything and allows the financial sector to bail itself out, which it already seems to be doing with the buyouts of some of the worst offenders already, albeit with Federal Reserve assistance. This seems to be working so far.
- Non-Paulson plan. This option, there might be a small infusion of cash, coupled with a large overhaul of the legal and regulatory framework. There are many good ideas out there that the Democratic leadership in Congress should seek out and consider.
- Modified Paulson Plan. The plan could again be modified in several ways, including making it smaller, and/or attaching left- or right-leaning wishlists, but this should rejected out of hand as untenable for the market and citizenry.
It seems to me that creating a new banking sector made up of non-profit and community banks is the way we get away from the greed and rapaciousness of the large commercial banks. Why does profit have to be the driving motive? There are other, better things for which to strive – like excellent service offerings that meet the needs of the customers. Most people in the United States have fairly simple financial service needs: checking and savings accounts, and simple forms of loans for cars, houses, small business. Those types of products could easily be done by banks based on a non-profit model.
Keep contacting your representatives in Congress and demanding that they take their time crafting a responsible solution to the “crisis” in the financial services market.
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