In the heat of the moment very often bad decisions are made. According to OECD (Organization for Economic Cooperation and Development), the decision by the U.S. Treasury to shift the TARP money away from buying toxic bank assets to simply giving money to the banks was the wrong move.

OECD outlined steps to follow to return the banking industry to a sound footing: First, bank assets must be guaranteed to avoid a run on the banks. Second, toxic assets must be removed from bank balance sheets. This is the step that was not done. According to OECD, the failure to remove toxic assets from bank balance sheets only serves to prolong the problem and make it more dangerous. These toxic assets can get worse through more defaults, thus making it necessary to inject more funds into the banking system. It's like holding a stock that keeps dropping and dropping and your margin calls become larger and larger.

So far the Fed and the U.S. Treasury have failed to clear toxic assets from bank balance sheets. This is an absolute must if our banking system is ever going to return to normal and bring back trust in the system. Just ask yourself, would you want to invest in a business when you don't even know what "bad assets" are being carried on the books? Who knows, maybe the value of the toxic assets are more than the bank is worth, in which case it should be shut down. At some point, someone will have to "bite the bullet" and clean up this mess. Congress, the Fed and the Treasury must put a stop to the practice of allowing banks to keep some of their transactions "off the books." That's what got us into this crisis in the first place. We need full transparency from here on or we will never be able to trust our banks again.

What are your thoughts on this?