The government has dumped $45 billion of cash and back stopped over $100 billion in troubled assets for each of Citibank and Bank of America.
Current market capitalization of Citi is about $17 billion and Bank of America about $27 billion. Put simply, without the $45 billion each, they would be bust.
But what do we have to show for it? Not much. They have hoarded the money rather than aggressively used it to create credit. It is the classic mistake of throwing good money at bad.
The American taxpayer has put into these firms far more than would be need to outright buy 100%. The government has been satisfied with a passive role.
That must change.
In this video blog shot on January 22, 2009, I explore the state of banks and what potentially can be done to make them work better.
Streaming Video from Duke University