Comment on the Economy - "2004"

If you want one year, more critical than most, where deregulation went amuck, it was 2004, when Henry Paulson, then CEO of Goldman was the main pusher, with the SEC approving, regulations were eased allowing non-bank financial institutions to use leverage above 15:1 to as much as 30:1 or so. So, then these megabanks moved much of their lending to the investment divisions of their banks to issue less capitalized loans.

There are more details which made these banks undercapitalized even more, like being allowed to use their cash (or even borrow) to buy back stock, reducing their capitalization, etc. Mark to market is another factor, though that part I think is necessary, but in this perfect storm it may need to be adjusted.

And, letting Paulson dole out TARP funds, when he was a key guy behind this whole mess, was just asking for trouble.

Nationalization may be the only option, because TARP money has been used to get preferred stock of the banks in exchange. All that effected was to essentially increase the banks' debt load. We probably should have been getting equity in exchange for the TARP funds, not preferred stock. So, nationalization, temporarily, at least gives taxpayers equity which sometime will be worth more, when the banks are turned private, likely smaller and with a better regulatory environment.