Beware the knives

Liberals have their knives out for fat cat bankers. They should put them away and take a deep breath.

The fact is, there are very few people capable of running banks, large or small, and most of them already are. There is no benefit to turning banks over to bureaucrats, or destroying them and the value of stock often owned by pensions, state retirement accounts, and people who worked hard their whole life.

There are many causes to the credit crisis, and banks are certainly at the center of the storm. That does not mean that individual bankers or banks are villains. Much of the blame goes to Phil Graham and a lot of misguided Democrats who changed the rules and allowed banks to invest in riskier enterprises and give loans to people who did not deserve them.

A whole generation forgot the lesson of the Great Depression and lived beyond their means. We are all at fault, and it doesn't help to point fingers at who might be more at fault than others.

So what to do now? Hidden beneath the headlines is the fact that many "risky" banks are actually making money. They look bad on paper because the value of the assets they hold is unknown. Since the markets have frozen up, it is hard to value property, but the regulators are forcing a "mark to market" strategy that is forcing banks to revalue property at low, low levels.

Because of this, banks are flirting with capitalization ratios that make it appear they are in worse shape than they are, if the same assets were valued over a longer term.

The banks need time, and we all need some sort of confidence in our real estate markets, which requires banks to be able to lend.

First, according to many, we need to pull our banks back from the brink. The best way to do this is to follow the advice of commentator Jim Cramer and implement the same kind of program of "forbearance" that saved the S&L situation of the 1980s. Once there is a market for real estate, the banks can mark the value of their assets in prudent ways, or dispose of them. Until then, the exercise is not only futile, but damaging.

Secondly, the government needs to provide guaranteed home refinancing for everybody at 4%. This will start the process of reducing inventory overhang, and doesn't punish those who bought wisely.

But the current mob mentality of the left, to cut off the heads of bankers and destroy the banks they lead, is horrifically irresponsible. It is the banking system that government should reform, not banks. That is done with laws, not seizure. Once prudent rules are back in place, and the market stabilizes, we want bankers running our banks, and we need our banks to succeed.

Or else the crisis is just beginning, and will be made worse by the Left's lack of understanding and disdain for money.