How to do with the crisis?

I agree that the states have to repair what they create with laws (Glass Seagall, subprimes, state warranty through GSE, fiscal stimulus of housing ) and cheap money (FED policies of Greenspan and Bernanke): a spring of fluid with numerous and explosive bubbles inside, which flew in the planet economy through the banking system. But giving to states around the developped world the keys of banks at the tax payers expenditure is dangerous and probably inefficient. It’s a waste of money and the true economy will suffer a severe depression because of that. There is a risk that states will save the banks at the odd of businesses.

Immediately if states have to secure banks it only could be done as Warren Buffet did with GE. Buying shares at preferential conditions ans especially a preferential right on the benefit over other shareholders and creditors.
For the future one very important solution I propose is better transparency in time and nature for all the financial products. Classic regulation focused on fraud is obsolete. A more specialised regulation focused of risk evaluation with continuous auditing by referees is needed because of globalisation and electronic transmission of money. This regulation will allow the agencies either federal or private , public and shareholders to know not only the main data on the past year in a bank sheet but the leveraging ratio including undirectly exposed assets extensively. It should be mandatory for a bank to disclose all the positions it has all over the world either directly or undirectly. On the other hand instead of putting the banks at risks by the market to market assessment of assets, it is the magnitude of leveraging which should be adressed by increasing drastically the capital of banks. It should allow economic actors to select investment in less exposed banks and force banks to decrease their leveraging in order to attract investors. For sure several banks will close or fail. 

I think also that the present situation is clearly also the result of fear, moral hazard and possibly fraud but it should be very difficult to address those in emergency. Nevertheless heavy interventionism from states especially if it involves spending public money to bail out banks should be done with this perspective in mind.

Finally I think that central banks which regulate interest rates and creation of money should also receive a mandate to monitor the trust positions in the banking system which could lead to a classic too big to fail or too interconnected to fail.
As for corporate governance and state share ownership it is far preferable to give the defense of the state interests to a private investment bank with a well defined contract instead of believing that “fonctionnaires” will do the job efficiently.

 This is not a matter for public money and government agents should be better employed to the new regulation process. But I would like to stress that the magnitude of the next crisis will be less important if the states in US and elsewhere avoid heavy interventionism in an economic sector like they did in housing.