The federal Office of Thrift Supervision closed Washington Mutual, and named the FDIC as the receiver.  Washington Mutual reportedly had $307 billion in "assets", and $188 billion of deposits.  JP Morgan Chase bought the assets for $1.9 billion - and extraordinarily favorable deal, if only those assets are valued approximately correctly.

We knew that Washington Mutual was doing poorly, financially, and particularly with the recent liquidity crisis, its failure does not come as a huge surprise.  But it got me thinking about how banks get shut down by the federal government, and who oversees them (between the Federal Deposit Insurance Corporation, the Federal Reserve Board, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision), and who makes the final decision to seize a bank - all topics on which I am profoundly ignorant.

My concern is in the context of my belief - or at least strong suspicion - that the current $700 billion "rescue" package is just the latest money-grab by this administration, an attempt to get federal funds transferred to Bush and Cheney cronies on a mind-bogglingly unprecedented scale.  With that in mind....

Who decides when to "seize" a bank?  Is there any chance that these decision-makers may be skewing their decisions in favor of making the bank fail, to make the financial crisis appear larger than it might otherwise be, in order to cause more panic to spur Congress to agree to things that otherwise wouldn't pass deliberation?  Or am I being overly paranoid by even considering that this might be a possibility?

We are seeing a replay of the build-up to the Iraq war:  Crisis strikes America.  The administration briefs congress, presents the "intelligence" that supports its case, proposes that Congress authorize sweeping powers for the administration, and stresses the urgency of approving its proposed actions quickly.

The vast majority of the responses I've seen start with the administration's $700,000,000,000.00 bail-out proposal, and tack conditions onto it to try to make it more acceptable.  That's the wrong approach.  In the end, it can only result in giving the administration everything they want, even if a few good things get passed along with it.  (Kind of like raising minimum wage in exchange for continuing to fund an illegal war to enrich defense contractors.)  Giving the administration everything they want would be a good thing, if only their proposal had been crafted with the good of the American people as a whole as its primary goal; but you can be sure that the proposal's primary purpose was to enrich the friends of the administration, and that any benefit to America was secondary.

It seems to me that the right way to approach this is to toss out the administration's bail-out proposal and come up with a new proposal from scratch.  You might end up in the same place, ultimately... if that's the best the brightest economic minds can come up with, maybe that's what we're stuck with.  But it's just wrong to start with the bail-out and tack on conditions, instead of starting from scratch to see how to really solve the problem.

Convene a task force.  Start from scratch.  Try new ideas.  Don't automatically start with the one that gives an astonishing, unprecedented amount of future taxpayer money to the wealthiest people in America and (in the form of interest) to China, Saudi Arabia, and whomever else is willing to finance the debt.