Excellent frontrunning the economy interview from Chris Whalen on the Too Big To Fail banks, which according to him, will eventually require restructuring. Unfortunately for us, DC keeps kicking the proverbial can down the road delaying the healing process (e.g. economic growth).

To quote/paraphrase Whalen:

The banks are looking for an exit strategy right now. Look at Wilmington Trust, they’re basically selling the enterprise for half of what the [stock] market thought it was worth. [Why?] Because it may be a good bid … it may be a fair value [for the bank's assets].

The political class got cold feet, and no one wanted another messy restructuring of a big bank holding company (Lehman Brothers, Washington Mutual, CountryWide, etc.). Because of a lack of vision and sticking their heads in the sand, Barack Obama is wearing Herbert Hoover’s concrete booties.

You can’t prevent [bank] restructuring; it’s going to happen one way or another. Unfortunately, we’ve wasted 2 years.

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Sad thing is, most people who know anything about accounting, banking and risk management have been seen this coming for several years (e.g. frontrunning the mortgage mess). But Wall Street perception and the mandatory hype to promote confidence can only last until the real books, not the “fundamentals” we see published on Google Finance balance and cash flow sheets, are made open to all.

Of course, the Federal Reserve won’t let this happen and is obfuscating the true cost of the TARP bailout. Naturally, in a time of depressing news and a market full of headline risk, no one wants to hear more bad news and it will be glossed or covered over… until we run out of spray paint.