The Randy Neugebauer banking crisis solution

Let markets solve their own problems, the Congressman suggested, right after a devastating market meltdown

By Andrew Leonard
March 22, 2010 10:57PM (UTC)
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The investigative talents of the Washington press cannot be denied. Now we know that Texas Republican Randy Neugebaeur has been fingered as the man who yelled "baby-killer" while Democrat Bart Stupak was speaking on the House floor during the tempestuous session that passed healthcare reform Sunday night.

Neugebauer, Neugebauer. Now why did I remember that name? Google is my own short-term memory's best friend, and it led me to an HTWW post from February 2009 expressing amazement at Neugebauer's intriguing approach to grappling with a world-shaking financial crisis during a Congressional hearing


With a panel of banking CEOs arrayed in front of him, Neugebauer asked why we just don't "let the market work these things out."

The issue at hand was what to do about all the "toxic assets" weighing down the books of the big banks. Just the day before, Treasury Secretary Geithner had disappointed the world by failing to deliver much in the way of specifics during the ballyhooed rollout of his plan to confront the problem. Neugebauer appeared to be suggesting that the best strategy would be to do nothing. Just let the banks take their lumps, and if they went bankrupt while the market worked things out, so be it.

My guess then was that if Citigroup or Bank of America had been forced to acknowledge the true market value of their mortgage-backed security assets and related derivatives at that juncture in time that they would have collapsed immediately, a la Lehman Brothers, and the financial crisis would have entered a new and even more disruptive stage. But we'll never know. Interestingly, the whole toxic asset issue seems to have been finessed for the time being; whether that's because Geithner's stress tests helped build confidence, or because of a more general relaxation in panic, I'm not sure. But it still seems to me coming so soon after the nation watched mostly deregulated markets drag the entire global economy into a severe recession,  the very question, "why don't we let the markets work these things out?" is one of the dumbest things any Congressman said during the entire debacle.


It's good to see that Rep. Neugebauer is, if anything, consistent.

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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