Soros: Obama "Lost a Great Opportunity" to Fix the Banks

Original Link: http://finance.yahoo.com/tech-ticker/article/228458/Soros:-Obama-%22Lost-a-Great-Opportunity%22-to-Fix-the-Banks

by Aaron Task

George Soros was an early and avid supporter of Barack Obama, so it's probably no surprise he gives the President high marks for his handling of international affairs, the stimulus package, the budget (the famed financier calls it "very courageous") and for "stabilizing" the financial crisis.

But President Obama "lost a great opportunity" by not taking a more radical approach in dealing with the banks, Soros says. "There's too much continuity with the bumbling and mishandling by the previous administration. Not enough discontinuity."

Specifically, Soros wanted Obama to "come out of the gate with a well considered plan" to recapitalize the banks, rather than continuing with the TARP and related bailouts. But the President may have been hampered by his desire to create consensus, Soros says. "The nature of far from equilibrium situations is that public understanding is always lagging behind events. If you're guided by desire to have consensus, you'll always be a little bit slow."

Essentially, Soros believes we should be following the so-called Swedish solution but fears we are heading down the same policy path as Japan. "We're effectively keeping zombie banks alive," he says.

To those who rail about the dangers of nationalizing banks, Soros says: "You have to recapitalize the banks for them to function. As it is, we are nationalizing the debt of the banks, but not the banks themselves."