How Serious is the Obama Administration About Nationalizing Banks?
Not very. Speaking to reporters today, newly confirmed Treasury Secretary Tim Geithner all but dismissed the idea outright: We have a financial system that
Jul 31, 202046.1K Shares732.5K Views
Not very.
Speaking to reporters today, newly confirmed Treasury Secretary Tim Geithner all but dismissed the idea outright:
“„We have a financial system that is run by private shareholders, managed by private institutions, and we’d like to do our best to preserve that system.
Bank nationalization has been floated in recent weeks as a potential solution to the collapse of the finance industry, though the debate has been a confusing one because different folks seem to have different ideas about what the term actually means. Few seem to think that it would be a good idea, for example, for the government to take sole ownership of the troubled banks. David Goldman, writing for the finance blog Inner Workings, gives one reason why not:
“„The worst thing about bank nationalization is NOT that the government will do a bad job of banking. Everyone does a bad job at banking. The worst thing is that it places untold trillions of dollars of new liabilities on the shoulders of a federal government that already is borrowing well over $1 trillion a year.
Earlier this week, The New York Timeslisted several other federal options that would probably best qualify as partial-nationalizations:
“„So far, President Obama’s top aides have steered clear of the word entirely, and they are still actively discussing other alternatives, including creating a “bad bank” that would nationalize the worst nonperforming loans by taking them off the hands of financial institutions without actually taking ownership of the banks. Others talk of de facto nationalization, in which the government owns a sizeable chunk of the banks but not a majority, with all that connotes.
Of course, Washington has already committed trillions of taxpayer dollarsto rescue scores of banks and other financial institutions in the last 12 months — including the direct purchaseof hundreds of billions in preferred shares.
If that’s not a form of nationalization, then nothing is.
Rhyley Carney
Reviewer
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