I proposed the simple idea of 'internet only' 'new banks' back here in "My friend the economist and my dumb question."

Since then Buiter, Stiglitz, Soros and Romer have proposed similar schemes. New banks: Did I get the scoop? Did you hear it here first?

But the really good news is that Marc Andreesen is now pushing the idea. Why is this good news? Well, Marc Andreessen could carry this idea.

Andreessen's got all the right credentials ie he is a wunderkind of the industry of wealth-creating technological innovation and has none of the wrong ones ie he is not of the wealth-destroying financial innovation industry.

And Obama and Andreessen are already personally acquainted. Can Andreessen carry this simple idea to move Obama? I hope so.

And I hope it can be done in time to demonstrate the Irish leaders that there is a smarter and simpler way. Talk about 'new banks' 50 minutes in. Transcript below. But note that as always Andreessen give great value entire way through.

Good banks, bad banks, doesn’t matter. What we need are NEW banks. And I actually think what we need — and I think the valley can play a role in this, I think there should be a new wave of financial institutions that should be created from scratch today. And they should take the role. So instead of trying to unwind some big bank that’s underwater, and hundreds of billion dollars insolvent, let’s create a whole bunch of new ones. And by the way, let’s have them all be new and online. So instead of having all this infrastructure and all these old systems and these ATM’s and all this stuff, let’s do purely online, purely Internet banks. Purely virtual, much lower cost structure. Because it’s going to take — even if you can figure out a way to fix the old banks, it’s going to take a long time. I mean it is a very complicated and involved process. They are deeply broken in very fundamental ways. Create a new bank. I mean a bank is a simple concept. You can create a bank in software.

I wrote about my idea of 'My friend the economist and my dumb question' here on 23rd January. I'm now in very good company. From Willem Buiter at the Financial Times on January 29, 2009 "The 'Good Bank' Solution"

There is an alternative solution to the problem of valuing the toxic assets. It would not involve nationalising the existing banks. Instead the state would create one or more new ’good’ banks - all state-owned and state-funded to begin with.

From Nobel economist Joseph Stiglitz on 02 Feb 2009 at Davos. "Let banks fail" reported in the Telegraph.

“the government should allow every distressed bank to go bankrupt and set up a fresh banking system under temporary state control rather than cripple the country by propping up a corrupt edifice”.

From George Soros on 04 Feb in the WSJ "We Can Do Better Than a 'Bad Bank' "

... about $1.5 trillion is likely to be required to recapitalise the existing banks properly. This money could be leveraged a lot more effectively if most of it were injected into the new good banks, unencumbered with the toxic waste of the existing banks.

From Paul Romer in the WSJ on 06 Feb "Let's Start Brand New Banks"

Everyone agrees that the United States urgently needs a few good banks. Turning bad banks into good banks is a difficult and risky way to get them. It's simpler and safer to start entirely new banks.

And from Willem Buiter again at the Financial Times on 08 Feb "Good Bank/New Bank vs. Bad Bank: a rare example of a no-brainer" rounding up the ongoing discussion:

I claim no authorship or originality for the ‘good bank’ proposal. The idea is obvious and no doubt was floating around the blogosphere and elsewhere as soon as the magnitude of the insolvency disaster in the banking sector became apparent.

The US, the UK and several other continental European countries are at risk of emulating Ireland, where the government first guaranteed all the liabilities of the banks (other than equity) and only after that began to nationalise the banks. This leaves the Irish government today in the not too enviable position of having to choose between sovereign default and bleeding the tax payer and the beneficiaries of normal public spending to make whole all the creditors of the banks.