Proposal: Jus' COME CLEAN: admit the TRUTH

The Stimulus plan is almost passed (Friday night 2-13-09)

Next item on agenda.

Rescue the banks.

Proposal

The Fed, the banks, the Congress and the President ALL need to get together in ONE room* .

They THEN need to:

1. Come clean to each other, and admit how big the problem is. (hint: I say it's closer to 20-70 TRILLION dollars (including sub-primes, CDO's and everything consumer (College Loans, credit card loans, car loans).
2. Discuss ideas on HOW to get rid of these CDO (securatized debt).
3. Agree how both Democrats and Republicans can support these outcomes.
   

Discussion goes here:

I'll start, you continue below...

1. My first proposal: Ban ALL future uses of financial instruments made from or supported by, or hedged against debt that has been aggregated together. (I believe this is a technical definition of a collateralized debt obligation, but am open to correction if wrong...)
2. I believe that All CDO's on the books of Every financial institution's books need to be written off to a value of ZERO dollars. If a bank is lucky enough to make money on it in the future, so be it, but for now the value has to be honestly evaluated, as what it is worth to another bank or trader today, namely nothing.
   
3. The zeroed out assets can either be held by the bank, or given to that "Bad Bank" I keep hearing about.
   
4. I contend that the worst of this financial crisis has YET to hit. HERE, I say*:

...I believe that we have ONLY seen 25% of the financial crisis in the United States. I feel quite strongly that the other 75% will drop on the economy as the CDO's that were made from CONSUMER DEBT (car loans, credit cards, Student Loans, etc) bomb as more and more people start to default and/or file for bankruptcy....

• I (again) contend, that if you look at how the banks performed, and specifically how they revealed their losses from the beginning of the housing/sub-prime bubble to today, the banks were extremely reluctant to disclose their full losses at one time, and dripped the losses out over several quarters, and even several years.
  

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* Like that'll happen soon... (Is there a conference room BIG enough to hold ALL those egos?)

** And for those counting, My batting average is PRETTY good in predicting trends/ideas/problems (so far...) I'll save that 'puffery' for another post.