Greenspan backs bank nationalisation

[dkf]

By Krishna Guha and Edward Luce in Washington

Published: February 18 2009 00:06 | Last updated: February 18 2009 00:06

Speaking to the FT ahead of his speech to the Economic Club of New York last night, Mr Greenspan said that “in some cases, the least bad solution is for the government to take temporary control” of troubled banks either through the Federal Deposit Insurance Corporation or some other mechanism.

The former Fed chairman said temporary government ownership would ”allow the government to transfer toxic assets to a bad bank without the problem of how to price them.”

But he cautioned that holders of senior debt - bonds that would be paid off before other claims - might have to be protected even in the event of nationalisation.

”You would have to be very careful about imposing any loss on senior creditors of any bank taken under government control because it could impact the senior debt of all other banks,” he said. “This is a credit crisis and it is essential to preserve an anchor for the financing of the system. That anchor is the senior debt.”

http://www.ft.com/cms/s/0/e310cbf6-fd4e-11dd-a103-000077b07658.html?nclick_check=1

[rockymountaindem]

1. Well I guess it's bound to happen now

If Lindsey Graham and Alan Greenspan are on board, the only other person we need to ask is Phil Gramm.

[dkf]

3. Yeah I know...

I wonder if this is being rolled out to prep us for Obama.

[rwheeler31]

2. Oh lets listen to this guy again. He makes no sense.

[Gin]

5. what is senior debt?

[dkf]

7. Senior debt

From Wikipedia, the free encyclopedia

In finance, senior debt, frequently issued in the form of a senior note, is debt that takes priority over other unsecured debt owed by the issuer. Senior debt has greater seniority in the issuer's capital structure than subordinated debt. In the event the issuer goes bankrupt, senior debt theoretically must be repaid before other creditors receive any payment.

Senior debt is often secured by collateral on which the lender has put in place a first lien. Usually this covers all the assets of a corporation and is often used for revolving credit lines. It is the debt that has priority for repayment in a liquidation.

http://en.wikipedia.org/wiki/Senior_debt

[grantcart]

38. I think that they want the taxpayer to bail out the bank's bond holders.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=132x8206993

[Canuckistanian]

4. How very un-Randish

Ayn Rand is probably turning in her unfettered free-market grave.

[yurbud]

6. so government fixes irresponsible behavior, then gives it BACK to those who fucked up?

[dkf]

9. Well we could let our economy collapse.

[yurbud]

14. or fix irresponsible behavior and NOT give it back to the fuckups

[dkf]

15. How do you do that?

[leftstreet]

17. Keep em. Make them Volks Banks

(Get it? People's Banks?)

:D

[dkf]

22. Aka Credit Union. No?

[leftstreet]

23. Caisse Populaire? Sure. Sorta.

Although several credit unions have converted to regular banks in the past few years, and not at the request of the rank/file membership.

The banking industry has been hostile to the small % of credit unions and have worked to keep them down.

[Two Americas]

24. define "economy"

The economy is not the financial industry. It is the producers. The economy of the producers, of the people, is already collapsing because of the ascendancy to power over the country by the financial industry. It is the financial industry people who need the lecture about "letting the economy collapse."

[dkf]

25. How's about "letting our ability to get credit collapse"?

I'd say we'd be pretty screwed.

[Two Americas]

26. not in the least

In farm credit, since the New Deal, finance is strictly regulated to support the producers. Almost anyone who wants to farm has access to credit. You cannot, however, use farm credit to speculate on land, or turn it or develop it in the hopes of making a killing. People loaning money to farmers make a good and stable living - they are precluded from making millions and billions and running the farmers off of the land. while their is a credit crunch and financial crisis everywhere else, farm credit hums along and is doing well. That is a good thing, or we would be facing famine right now.

We did this in agriculture, successfully. We reigned in capital and forced the banks to support the producers, the people, rather than the other way around. Let the "free market" predators go play games in Dubai. Let the people here live in dignity and security.

Are people here lazy and unproductive because they benefit from subsidized food? No. They are more productive. Were farmers driven from the land because they no longer had "incentive" to get rich? No. The opposite is true.

Capital and finance in medicine and housing and other essentials could be regulated just the way they are in agriculture.

Get the boot heel of the banks off of the necks of the people. It can be done, it has been done, it must be done. We should never be advocating any sort of compromise on this, and propping back up banking the way it was is a compromise, a serious compromise.

The banks - the "financial industry," Wall Street, the investors and speculators and manipulators - own everything in this country: the homes, the land, the companies, the shops, the factories, the government. Yet they produce nothing. Why do people feel that we need to compromise on this, work within the system? Why do people think that this cannot be done or would be difficult or take a long time? How clear does it need to be that a small group of people is destroying everything, and that they could easily be stopped?

Let "the economy collapse?" If by "economy" we mean the financial industry, I say tear it down. "Mr. Obama - tear down this Wall (Street.)"

[yurbud]

36. South America has essentially turned their back on international bankers

and they seem to be doing fine.

[JVS]

32. How about we take the banks and use them to generate state revenue forever?

[anonymous171]

35. We should sell it to the highest bidder. nt

[Phoenix-Risen]

8. If Greenspan is for it

I am vehemently against it. He is as responsible for the mess as anyone, maybe more.

[Raineyb]

41. Which I suspect is exactly what he was going for

It is out of character for a free-market absolutist to suddenly talk about nationalization unless his idea of nationalization is completely different from what I think should happen. (I'm thinking along the Swedish model)

Regards

[Occam Bandage]

10. Well, that's it, I'm now against it. nt

[cliffordu]

20. Me too. Anything those two fuckups think is a good idea has to suck.

[Lasher]

11. Greenspan must have been born without that gene that tells us when to be ashamed.

And to just STFU.

[Ikonoklast]

12. Greenspan needs to be smacked in the head with a salami.

He and his Rand worshipers are the reason we have this disaster.

No regulations, no taxes, no oversight, free markets, free markets...

Free marketeers, my ass. They are all for privatizing the gains, and socializing the losses.

The trouble is, all he's trying to do is salvage his terminally damaged legacy.

Greenspan's actions in the years leading up to and during this financial meltdown are the stuff on which dissertations will be written.

[dkf]

13. That does make me worried.

I'm nervous of the whole moneypit scenario.

If we do nationalize what are the potential downsides in terms of obligations?

[Golden Raisin]

31. Just like Claude Rains

in CASABLANCA, Greenspan was "shocked":

"Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief," he told the House Committee on Oversight and Government Reform." (NY Times, October 23, 2008)

Yeah, under your laissez-faire, decades-long aegis regulatory controls were bad enough that we now have a total implosion/meltdown of the economy possibly even more devestating than 1929.
=======================
Rick: How can you close me up? On what grounds?

Captain Renault: I'm shocked, shocked to find that gambling is going on in here!



Croupier: Your winnings, sir.

Captain Renault: Oh, thank you very much.



Captain Renault: Everybody out at once!

[kwenu]

16. He said another TARP is a good idea too.

[defendandprotect]

18. Only with guarantee that they are NEVER privatized again ... but operated

as government banks --

[TTUBatfan2008]

19. I figure if Greenspan is saying it...

then the country should probably run away from it. He helped get us into this mess.

[regnaD kciN]

21. That whirring sound you hear...

...is Greenspan's mentor Ayn Rand spinning in her grave. :rofl:

[iamthebandfanman]

27. screw the banks

nationalize health and energy!

[cottonseed]

28. Nationalize, break up, and reinstante Glass Steagal

Manage this free market economy. Seemed to work pretty well for a few years.

[inthebrain]

29. I suppose since Marxism and socialism are becoming more appealing to Americans again....

The Republicans are out to fool people with this privatization scheme. In other words, we will find these banks with public money which in turn will be invested into the stock market.

Not the first time the Capitalist have used a leftist idea and tried to co opt it into something it's not.

[anonymous171]

37. Corporate Socialism? nt

[inthebrain]

40. Akin to George W Bush's "Ownership society"

When talking about SS privatization. Yeah, we'll really own those corps by giving them our retirment money and having no say what's done with it.

[snowbear]

30. How the hell does Andrea do it?

.
.



Ack.


-

[JVS]

33. Even former Randroids need Big Brother's help now! This is a triumph against those fuckwads!

[BR_Parkway]

34. Him and Slimeball Senator from SC saying this? Amazing how that

makes me question it even more now than I was before.

[grantcart]

39. I think that they want to bail out the banks bond holders

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=132x8206993