Planet Money has checked in with Posen a few times for insight into the banking crisis. He compares the current crisis in the US to Japan's 'lost decade' and banking crisis in the early 1990's.
Posen suggests that regulators get tougher on banks. To paraphrase, they should get the bankers out of the casino, sober them up, and get things back to normal. A more gentle approach (like the one we're using) will result in 'zombie banks' - banks that are really dead but they still manage to walk around and cause trouble.
To put an end to things, he suggests examining all the banks and wiping out the ones that have no value. Why isn't that happening? While it would help us get back on track more quickly, the political and short-term economic consequences would be extremely ugly.
What do you think is best? Should this zombie thriller come to an end quickly or should we clean up the mess slowly? Tell us about it in the comments.