Only now, at the beginning of his administration, does President Obama have the opportunity to transform perceptions. Only now, after all, can he present himself as the clean pair of hands able to do whatever it takes to clean up the mess he inherited. Should he fail, he will find himself swiftly transformed from wished-for saviour into yet another inadequate bungler.

So what should we demand from this announcement? In a word, a solution. Half measures must at last be abandoned. What is needed is action so strong that no doubt over the health of surviving financial institutions can remain.

The first requirement then is solvency: it is to ensure that surviving financial institutions are adequately capitalised to survive the losses ahead. The clear lesson from past bank crises is that zombie banks are death: an undercapitalised bank is inherently irresponsible. The government must either slay the living dead or bring them back to health. By doing this, the government will also go a long way towards ensuring that financial institutions have the incentives and the ability to make the loans the economy needs.