On Oct 2, 2008, at 3:35 AM, C. G. Estabrook quoted John Nichols:
> The plan is based on a proposal made last week by former FDIC chair
> William Isaac, who recalled that in the 1980s Congress enacted a
> "net worth certificate" program - which allowed the federal agency
> to shore up the capital of weak banks to give them more time to
> resolve their problems - and the FDIC resolved a $100 billion
> insolvency in savings banks for a total cost of less than $2 billion.
>
> "It was a big success and could work in the current climate," argued
> Isaac.
According to the FDIC's own history
<http://www.fdic.gov/bank/historical/reshandbook/ch6altvs.pdf>
the program started in 1982 and applied to 29 savings banks with total assets of $40 billion, i.e. it was pretty small. And it was basically funny money. It did not solve the longer-term problems of the financial system, and was part of the Reagan administration's disastrous strategy of "forbearance," which only made the problem bigger and more expensive as the decade progressed.
Doug