Time was, we didn't much like Oppenheimer analyst Meredith Whitney. She was just a little too gleeful about playing scariest bear in all the land, it seemed to us, and we found it annoying and predictable: In times of panic, there's always a race to the bottom among market prognosticators, as everyone competes to be the darkest soul out there. (You see this on CNBC all the time now. Dow 4,000, here we come!) But we've come around to Whitney, and not just because she's been right about everything for at least the last year, or even because she's pretty and married to a professional wrestler. In the op-ed she wrote in the Financial Times today, Whitney presented the most lucid and clear plan to combat the financial crisis we've seen so far. The solution, she said, is a massive "yard sale" in which the banks sell their prized possessions for whatever price someone will pay.

Sounds simple, and it is. Since the credit crisis began to bust out into the open in the late summer of 2007, banks, even some of the ones with relatively sterling reputations, have engaged in all manner of accounting gimcrackery to disguise the market value of what they've got on their books and forestall the inevitable reckoning. As long as this continues, says Whitney, the financial system will remain in peril. And as it stands now, the plan is to make taxpayers buy a bunch of crap, at a price far higher than a prudent private buyer would ever pay, which makes not one iota of sense. Writes Whitney:

While it is never pleasant to sell one's 'crown jewels,' the strain of this credit crisis and the overextension of many bank balance sheets will require that they sell what they can and perhaps not what they would like.

We personally have no idea what these "crown jewels" might look like (a retail-banking franchise in Manitoba, how irresistible!), but we sure do like the idea of a yard sale. Just picture Vikram Pandit standing outside the Citicorp Center, making change out of a cash-stuffed fanny pack.

America’s banks need to hold a yard sale [FT]