There's been a chorus of calls for nationalization — from Paul Krugman and Nouriel Roubini to Alan Greenspan and Lindsey Graham — which thus far the Obama administration has resisted. As Roubini noted, however, the "stress test" that Treasury Secretary Timothy Geither proposed in his financial stability plan naturally leads to nationalization:
[T]he reality is that Mr. Geithner is going to confirm the insolvency of the financial system. Once we face this truth, there really isn't much left to do but nationalize. We are not talking about the government operating the banks for the long-term. But, as was done in Scandinavia in the early 1990s, we are talking about orderly clean up, then reselling the banks to private investors.
Of course, there is the question of the political viability of nationalization. Obama has argued that "America's different," and won't stand for nationalization. And as The Hill noted, federal ownership of troubled banks would play into false claims that Obama is a socialist.
But if not nationalization, then what? Geithner's public-private investment fund may get toxic assets off the banks' books, but nationalization is a more straightforward process, and doesn't depend on Wall St. being willing to buy the junk currently clogging up the banks. And the longer nationalization is delayed, the longer the solvency of the entire banking system will be in question. Thus, more good banks will get dragged down into the mud with the bad.
rest http://thinkprogress.org/2009/02/21/nationalizing-banks/
No comments:
Post a Comment