5 of 7
James Galbraith: Needs to get tougher on the banks
Where the banks are failing
Bank failures and foreclosures keep mounting
Professor of public affairs and government at the University of Texas

I've been most vigorously opposed to the decisions on banking and finance. The country needs an account of what happened, it needs enforcement, investigation into fraud, reorganization of the financial sector, and a government policy that shrinks the financial sector strategically, creating a more decentralized, accountable and disciplined financial sector than we have had.

We should have been pushing toward resolution of the compromised banks, rather than propping them up with a view that they could recover as the economy does. The government is perfectly capable of pumping funds into banks, and is doing so at an enormous rate. So the banks will survive. But it's not a formula that would produce a return to lending, an expanding economy based on private credit. The failure to resolve the underlying debt issues facing households means that we are unlikely to see a renewed credit-led expansion anytime soon.

NEXT: Anne Krueger: Leaving too much to Congress

Last updated August 06 2009: 12:32 PM ET
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