Banks Teeter

Read this for a discussion of the state of the financial system.

"The size of the problem is growing faster than the banks' ability to handle it," said Joe Battipaglia, market strategist at Stifel Nicolaus. "We're halfway through the bailout money, and the banks are in worse shape than they were six months ago."

Investors expect Obama's team to consider a range of options, including pumping more money into banks and creating a government entity to buy up bad bank assets so they'll start lending again.

What makes us think that throwing another few hundred billion is going to make things any better? Why do we want these large banks to stay afloat? Wouldn't we be better off letting them die, and let the smaller banks with better management grow stronger?

And what makes us think that the government could run the banking system any better than the current boards and CEOs? Politicians generally did not go to school to learn about business. Politicians generally don't have a business background. I wouldn't trust my money in a bank that is owned and operated by our government.

The most troubled banks are "going to definitely go down" without more government help, said Jonathan Macey, a law professor at Yale University who wrote a book about a bailout of Sweden's banking system during the 1990s.

"And they may go down with it," he added. "The pace of these bank losses is outrunning the infusions by the government."

The banks have had their chance. If there has to be a bailout (and what would Democrats do if they weren't spending money), it's time to bail out the people and NOT the companies. How about using bailout funds to pay down the mortgages of those of us who have been responsible homeowners? Paying down our mortgages would not only be beneficial to us as homeowners, but that money would be a huge cash infusion to the banks and holders of out mortgages anyway. It's a win-win. Why can't those in charge figure this out? Because they don't want to? Because they have another agenda?