First, we must accept that GM and Chrysler are bankrupt and help them through Chapter 11 bankruptcy. Management, the UAW, the retirees, the shareholders, the note holders, etc will all have to take significant hits. The only group we should protect are the designers and engineers who will create the next generation of cars and the methods to produce them. These people we need to reward highly.

As for the rest - except for real management talent; assembly line workers, accountants, lawyers, hr professionals, etc are a dime a dozen. We need to insist as a part of the restructuring that the pay for these people come down in an amount equivalent to that proposed for the CEO's of Wall Street Firms. This applies equally to the people employeed by the firm and those whose services are done by contract. No two to five thousand per day payments for consultants and/or lawyers.

For the banks we need to do two things out of the box - (1) reestablish the requirement that short sales may only take place after an uptick in the stock price. This is an idea shared by both Steve Forbes and President Clinton who observed that the absence of this rule let speculators drive the price of the stock into the ground; (2) eliminate the 'mark to market' rules that now are destroying most of our financial institutions.

This is a very difficult, at least for me, concept to explain. Mark-to-market is essentially requiring banks and other investment organizations to put the assets on the books at the current value as of today. This seems sensible but has proven to be anything but that. To provide an idea, let's say that we have 5 home owner's who have purchased $250,000 homes and put 20% or $50,000 down. The market has fallen sharply and the homes are now worth only $150,000. Although all of the people who have taken out mortgages to purchase their homes are making the payments on-time each and every month, the MTM rule requires that the bank now value these five mortgages at $750,000 rather than the $1,000,000 that they are receiving payments upon.

Our banks, as a whole, do not suffer from a lack of liquid assets to lend, but rather from a shortage of capital resulting from the MTM rule. With the value of their loans going down, the need for additional capital to meet the secure levels required by the FDIC, etc. continues to rise resulting in the banks being unable to lend despite having cash on hand.

I apologize for getting too detailed, but the cause of our current problems lies with these two rule changes together with the irresponsible purchasing of high-risk mortgages by Freddie-Mac and Fanny-May. Had we have those two new rules not present and the insane actions of the two FM's, we would not have today's problems.