I've always been impressed with Steven Eisman (e.g. on the Charlie Rose show). Today, Tom Freedman quotes him
“I wish people would stop saying that this is a crisis of confidence,” said Steven Eisman, a portfolio manager and banking expert at FrontPoint Partners. “The loss of confidence is just a symptom of bad credit and over-leverage. The banks are not lending because they know their balance sheets are loaded with future losses and they don’t have enough capital. The TARP gave them preferred equity, which is nothing more than a bridge loan. We need the government to force the banks to write down all their bad assets now and then recapitalize themselves, preferably with private capital. Those banks that cannot raise sufficient capital should be seized and their deposits sold off.”
Pace Eisman, the top person at Citigroup, Vikram Pandit, was saying last year (again, on the Charlie Rose show) that the banking problem was merely a crisis of confidence.