Republicans start to support the idea of nationalizing insolvent banks by Nouriel Roubini

[Better Believe It]

Republicans start to support the idea of nationalizing insolvent banks
by Nouriel Roubini
February 15, 2009

George Stephanopoulos cited twice the Washington Post op-ed - that Matt Richardson and I wrote in support of nationalizing insolvent banks - in his Sunday "ABC’s “This Week" program and asked his four program guests if they supported the idea of bank nationalization. While the Democrats Maxine Waters and Charles Schumer were a bit formally cautious in formally supporting this idea – lest of being accused of being Bolsheviks - the Republican Senator Lindsey Graham – a conservative from South Carolina - would not rule out the idea of nationalizing insolvent banks. As Graham put it in the ABC program…:

"This idea of nationalizing banks is not comfortable," said Sen. Lindsey Graham (R-SC). "But I think we've got so many toxic assets spread throughout the banking and financial community, throughout the world, that we're going to have to do something that no one ever envisioned a year ago, no one likes. To me, banking and housing are the root cause of this problem. I'm very much afraid any program to salvage the banks is going to require the government... I would not take off the idea of nationalizing the banks."

And while President Obama repeated again his arguments that the Swedish model of nationalizing the banks – as opposed to the Japanese approach of keeping zombie banks alive – was not appropriate for the U.S. he did not totally rule out – when probed twice in an interview with the Washington Post’s E.J. Dionne – the possibility that a government takeover of some insolvent institutions may eventually take place.

This is really breath-taking, that even free-market economists are talking about the federal government taking over the nation's largest banks. I'm not sure which is more mind-bending, the thought of an African American in the White House or Citigroup becoming part of the Executive Branch. Bank of America would truly be living up to its name then.

What's even more astonishing is for a Republican from South Carolina, not Maine mind you, but the Palmetto State, a conservative like Sen. Lindsey Graham, to say that nationalization needs to be something to consider. And he wasn't alone. Rep. Peter King of New York also allowed for this possibility.

Please read the complete article at:

http://www.rgemonitor.com/roubini-monitor/255573/republicans_start_to_support_the_idea_of_nationalizing_insolvent_banks

[endarkenment]

1. lip-sync milli-vanilli style support

as soon as the administration moves in that direction (and they will be forced to do so) the Republic Party will Greek Chorus "Socialismic!" "Communismalist!" blather, ably assisted by Corporate Media.

[CoffeeCat]

2. Exactly which banks are we talking about here?

Roubini advocates nationalizing large banks that are insolvent.

Which large banks are considered insolvent? Wells? BofA?

[endarkenment]

6. I think the answer is 'all of them' but ...

part of the problem is that the fed and other agencies are not being forthcoming about just who is insolvent and how insolvent they might be.

[Better Believe It]

7. That's what the "stress test" is designed to find out

[notesdev]

8. We had a 'stress test'

Every last one of the large banks failed it and came to Uncle Sam for a handout. The stress test has been failed - none of them are adequately capitalized, and the US cannot borrow enough money to correct that situation.

They are ALL insolvent. Any pretense otherwise is a result of cooking the books. If you or I tried on our balance sheets (aka tax returns) the kind of accounting tricks that are routine in corporate America right now, we'd be on a one-way trip to fraud conviction city. The only banks that aren't insolvent are relatively small ones that kept an adequate capitalization ratio, lent responsibly, and stayed out of the default-prone sectors.

[biopowertoday]

9. I believe they were talking of the ones holding the toxic assets.

[Generic Brad]

10. And what happens to all their employees if that happens?

The overwhelming majority of bank employees are white collar working stiffs who have never reaped the huge profits of the executives. Who manages the banks that get taken over?

[Veritas_et_Aequitas]

3. They'll backpedal when nationalization becomes a serious issue.

How many of us have been crying for nationalization since October? I hope it comes to pass.

[liberal N proud]

4. They have an ulterior motive here

But what is it?

Lindsey Graham wouldn't be bringing this scheme up if there wasn't a hidden agenda. They are GOP and do nothing unless there is political gain or profit.

[Better Believe It]

5. Let's test the Republicans and Democrats! Bring a nationalization bill before Congress!

Let's find out which Senators want to save the financial system and which ones are opposed to nationalizing the insolvent big banks.

There is only one way to do that.

We need an effective nationalization proposal on the floor.

Let President Obama bring a clear proposal to nationalize the big insolvent banks before the House and Senate.

Pelosi and Reid (with co-sponsors) should quickly bring a bill incorporating President Obama's nationalization proposal up for debate and a vote.

Let's debate it and vote on it.

And if any Senators threaten to filibuster against nationalization, let them!

They will be defeated.