Bank Nationalization: "As American As Apple Pie"



http://www.huffingtonpost.com/2009/02/22/bank-nationalization-as-a_n_168948.html
Sam Stein stein@xxxxxxxxxxxxxxxxxx | Reporting From DC
February 22, 2009 02:16 PM

Bank Nationalization: "As American As Apple Pie"

Even before the panel discussion commenced, George Stephanopoulos knew
that this would not, in actuality, be a debate. The topic was the
nationalization of major U.S. banks, which just a few weeks ago was
treated as either inconceivable or illogical. But with the credit
crisis growing worse and chorus of political support growing louder,
the ABC host opened up a segment with more of a statement than a
question.

"Over the last several weeks, you have seen something that was
radioactive even six months ago, the idea of nationalizing major banks
in this country, moving towards something of a consensus,"
Stephanopoulos said.

There wasn't a panelist who disputed the idea -- indeed, naysayers
were mocked. Nobel Prize-winning economist Paul Krugman scoffed at the
notion that the White House was one of the few remaining holdouts,
picking apart the Obama administration's comment as a sophisticated
sidestep.

"That Gibbs statement was masterful," Krugman said of the remark by
Obama's press secretary that a "privately-held banking system"
regulated by the government was optimal. Some interpreted it as White
House opposition to nationalization, but Krugman argued otherwise. "It
sounded like a reassurance [but he] was actually saying what everybody
believes. Nobody wants the government running the banking system for
any length of time."

Rather, Krugman argues, the government's involvement should be
temporary -- just long enough to wipe out shareholders, fire
management, clean up the banks and quickly resell them into the
marketplace. He added that it seems likely that there is no other
choice.
[......]

There was the conservative George Will:
"With credit now treated essentially as a public utility, the
difference between what we have and what nationalization would be is
marginal. One number: the market capitalization of Bank of America is
$19 billion since October they have received $45 billion in public
funds. So what's the difference?"

And then there was Krugman, who summed it all up by calling
nationalization "as American as apple pie."
"We have nationalized 14 banks already this year. We don't call it
that but there were 14 banks, two a week that the FDIC seized because
they didn't have enough assets to pay their depositors. The Federal
Deposit Insurance Corporation says, 'ok, we are taking over. We are
cleaning out the stockholders.' We are going to do exactly, as Nouriel
said, we should be doing for some major banks. So actually
nationalization as properly understood is probably as American as
apple pie."
.



Relevant Pages

  • Re: OT ~ THANK YOU President Obama
    ... Senate Banking Committee Chairman Christopher Dodd said the nationalization of some banks could be needed "at least for a short time," according to a Bloomberg report. ... Whether Bank of America and Citi will be nationalized by the government for a period of time before they can privatize them again," said Angel Mata, managing director of listed equity trading at Stifel Nicolaus Capital Markets in Baltimore. ... If President Barack Obama, a Democrat, is inclined to nationalize the banks -- and the bank rescue plan outlined by Treasury Secretary Timothy Geithner leaves that question unanswered -- he may need greater support than the opposition party has shown so far in his young presidency. ...
    (rec.outdoors.rv-travel)
  • Greenspan supports US bank nationalization.
    ... Nationalizing banks must be a last-resort, ... nationalization consideration. ... focused nationalization Sweden used to right its banking ... Though the notion of such a government takeover is alarming, ...
    (soc.history.medieval)
  • Re: OT ~ THANK YOU President Obama
    ... nationalization of some banks could be needed "at least for a short ... "The nationalization question is what everybody is focused on right ... If President Barack Obama, a Democrat, is inclined to nationalize the ... That can be done without putting it in the hands of the government. ...
    (rec.outdoors.rv-travel)
  • Re: Britain does it better
    ... nationalization of banks all over the Continent, ... This is a collapse in progress. ... As for bank nationalization in Europe, ...
    (rec.martial-arts)
  • Re: Bank Nationalization: "As American As Apple Pie"
    ... When government takes over any institution, but then returns that institution back to private hands, that is not what most people think of as "nationalization". ... the idea of nationalizing major banks ... "That Gibbs statement was masterful," Krugman said of the remark by ...
    (soc.retirement)