I thought Barack Obama delivered a great speech tonight. It’s only weak spot was this little ditty on his administration’s approach to the banking system:
[W]e will act with the full force of the federal government to ensure that the major banks that Americans depend on have enough confidence and enough money to lend even in more difficult times. And when we learn that a major bank has serious problems, we will hold accountable those responsible, force the necessary adjustments, provide the support to clean up their balance sheets, and assure the continuity of a strong, viable institution that can serve our people and our economy.
I would be hard-pressed to say what that means. And yet the other part of the speech about the banks—the part about how rescuing the financial system isn’t about rescuing bankers its about rescuing the entire American economy—was spot-on. The idea of the stimulus is to close the gap between what we are producing and what we could be producing. But without a well-functioning banking system, it’ll be difficult-to-impossible for the economy to ever get off life support. Businesses with opportunities to expand need to be able to get loans. Obama’s plan for the economy is a three-legged stool—stimulus, housing, banking—but the banking leg is the most important one and it’s also the one on which the administration has been least convincing. I saw a poll showing that 80+ percent of the public feels more optimistic after Obama’s speech. I’ll feel more optimistic when I see a convincing plan for the financial sector.