I read the speech and ordered the publication (GOOG cookies are prohibited on my machine). It took me a while to stop laughing when I read this.

[W]e started to study historical and international records of financial crises...

Irving Fisher (1, 2) and an anthology edited by Martin Tradeable-Gas-Rights Feldstein, The Risk of Economic Crisis, including Benjamin Friedman, Paul Putz Krugman, Lawrence Summers [who needs no introduction], and E. Gerald Corrigan: The Counter-intuitive Who's Who of Fiscal Policy Gurus.

Happily, I persevered as did Mr Backstrom and colleagues. For the Swedish authorities had only seven banks, dominating 90% of the financial sector, to "restructure." I noted with interest the Riksbank's (FRB equivalent?) material demonstration of full faith in these banks' directors, hand in hand with daily auditors of the Bank Support Authority.

Collateral was not required for the loans to banks, neither intraday nor overnight. The banking system was free to obtain unlimited liquidity by drawing on its accounts with the central bank.

Arguably the conformation of monetary policy from fixed to float up to the Maastricht Treaty catalyzed the greatest challenge of re-coupling financial and economic incentives domestically. So his analysis implies.

Rescuing the banking sector was necessary to avoid a collapse of the real economy. There is no evidence that a credit crunch developed, though anecdotal information did suggest that creditors became more restrictive.

But what I found most interesting in Mr Backstrom's remarks is the consensus on organizing principles of an RFC-type strategy, according to him one or the other.

1. "[D]eferring the reporting of [bank] losses for as long as is legally possible and using the bank's current income for a gradual writedown of the loss-making assets." This is more or less how Paulson Geithner LLC is directing Congress to approve the Bailout Bill. However the compound "difficulties," as Mr Backstrom predicted it,"leading to much greater problems when they ultimately materialize," are further glossed by obscure valuation methods and tax easements in the measure and conjoined with HR 3997 and 1442, sliming its way to the House floor. (At this point I digressed to research further USC and US case law re: impaired obligation of contracts and federal requisitions)

2. "[A]n open account of all expected losses and writedowns ... This clarifies the extent of the problems and the support that is required. Provided the authorities and the banks make it credible that no additional problems have been concealed, this procedure also promotes confidence. It [also] entails a risk of creating an exaggerated perception of the magnitude of the problems."

Anyway, thank you for that information.

Diversity is the key to economic and political evolution.