Is Washington about to pull a fast one on the American people?
We’ve all heard in some form the quote from poet and philosopher George Santayana: “Those who cannot remember the past are condemned to repeat it.” Are we about to see history repeat itself?
In the coming days the Obama administration will begin “stress testing” banks. Those in need of capital will receive it. Those that are well-capitalized will be deemed as such. End of story.
Is this a legitimate exercise in financial analysis or a pulling of the wool over the collective eyes of the populace?
At the risk of being a conspiracy theorist this “stress testing” seems uncomfortably similar to FDR’s “bank holiday” in 1933. One of his first post-inaugural acts was to close banks for a three-day cooling off period in an attempt to stem a run on the system. As history has recorded FDR made clear his intent: “The only thing we have to fear is fear itself.”
In an attempt to quell this fear the Federal government inspected the books of all US banks during this three-day “bank holiday.” Those that were insolvent were closed. Those that were solvent were allowed to reopen. Problem solved.
Clearly 1933 was a simpler time – possibly so that the American people were trusting to the point of being naive. (Editor’s Note: Today it can be argued the pendulum has swung to the point we’re overly skeptical.)
It’s an impossibility to have inspected the books of all US banks (let alone thoroughly) over a three day period. Are we to believe in 2009 that anything has changed? Stay tuned.
Let’s be clear – no one is making light of the situation. Everyone wants to see an end to the panic and a return to rationality. Let’s hope we’re told the truth so the journey isn’t made under a false pretense.
As of 02/24/08 the Obama administration has yet to submit nominations for key Treasury posts such as deputy secretary and undersecretaries for domestic finance and international affairs. The “Treasury Officials” page of the US Treasury website lists only one biography – that of Secretary Geithner. Many lower level policymaking positions remain unfilled.