The debate over the nationalization of the banks

[dcsmart]

25 February 2009

The United States government has to date handed over some $300 billion in taxpayer funds to more than 400 banks under the Troubled Asset Relief Program (TARP) approved by Congress last October. These cash injections are part of a much broader commitment of public funds, including debt guarantees, low-cost loans and other subsidies estimated to total between $7 trillion and $9 trillion.

Nevertheless, US bank losses are mounting and are expected to surge further as the global recession and soaring unemployment undermine trillions of dollars in holdings backed by defaulting consumer loans and commercial real estate. Fourteen banks have been seized by state and federal regulators this year after 25 failed in 2008, and as many as 1,000 more are expected to fail within five years. Banking giants such as Citigroup and Bank of America have suffered mammoth losses and are on the verge of collapse.

The response of the Obama administration has been to announce a new and virtually open-ended bailout program that will likely involve trillions of dollars in additional taxpayer funds. This has not satisfied the financial elite, which wants nothing less than ironclad guarantees that its wealth and power will not suffer as a result of the crisis precipitated by its own speculative policies. Bank stocks have continued to plummet since Treasury Secretary Timothy Geithner announced the administration's financial rescue plan on February 10.

In the face is this mounting disaster, official public debate has increasingly focused on the possibility that some major banks could end up under government ownership. The threat of "nationalization" has become headline news.
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FULL ARTICLE
http://www.wsws.org/articles/2009/feb2009/pers-f25.shtml

SEE ALSO
The case for nationalizing the banks
19 January 2009
http://www.wsws.org/articles/2009/jan2009/pers-j19.shtml

[ww2player]

1. Taxpayers and America getting screwed yet again by captured politicians.

These rocket scientist's who are giving trillions to the very same folks who created this mess are really out doing themselves. How about taking the advice of the economist folks who saw this comeing a decade ago and tried to warn everyone that a crash was coming from the housing bubble. That would make too much sence. The majority of Politicians will continue to ignore them and focus their attention and the taxpayers money on the same policies that got us in this mess to begin with. The internet bubble bursts.. reinflate the economy with a housing bubble. That one bursts... now it appears they are going to try to reinflate the economy by borrowing trillions from China that will never be able to be repaid without hyperinflating the dollar. It is already doomed to failure. This country is screwed when the only hope of growing the economy is more and more borrowing. Maybe one day the politicians and public will get a clue. Sooner or later those countries we are borrowing the trillions from will realize the US can't pay it back and will stop buying our debt. That will be the day we are no longer the Superpower of the World and will take a seat behind China and India.

[JohnWxy]

2. Getting an equity share in banks for restoring their assets to debt ratio is the only way to go.

buying the toxic assets is just giving them money for worthless assets and letting them walk away with a clean balance sheet. No fucking way. We should share in the upside for saving their asses.

[MercutioATC]

3. Close them, break them up, sell off the assets.

...just like you would with any bankrupt company.

Appraise the assets and sell them off at fair value to healthy banks. There WILL be buyers.

No taypayer investment needed, the shareholders and bondholders (rightly) take the hit.