Obama was elected on the promise of change, and change he has provided. As far as campaign promises go, it has to be the easiest of promises to meet. Change is change; if he wants to change his mind about things he said in the past, he has the logic to do it.
So far he has not changed his message of change--except where it comes to managing the banking crisis.
His Secretary of the Treasury, Timothy Geithner, has been stubbornly committed to continuity. Surely, this initially made sense. Change for change's sake looks like the desperation of uncertainty. Markets hate uncertainty. So it has made sense for Mr. Geithner to appear to have a plan that was somewhat consistent with the last plan, even if it was a plan created by an unpopular adminstration.
However, the time has come to say what the markets already know: the big banks are insolvent. They need to be wiped out, possibly bond holders as well. Trying to prop them up has more to do with protecting bankers at this point than protecting lending. Geithner needs a plan to restore lending, not keep bankers--including holders of shares and bonds banks--whole. Bondholders and shareholders of Citi, Wells, etc. need to be wiped out.
Fresh capital then can be injected into banks that are healthy and that are lending, rather than to inject capital to protect people that made stupid decisions (bankers, and buyers of banking shares and debt).
Obama can claim change. He can claim that he has been on the job only 6 weeks, and needed the time to make a plan. Now that it is evident what is happening, it is time to own it, and deal with the fallout.
Once the banking crisis is put behind us, there will be less uncertainty in the market
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