The Government Bank (decorated with pretty pictures of Obama and Pelosi) may be coming to your town soon.
What a deal!
[M]ost members of the Obama economic team concede that the rapid deterioration of the country’s biggest banks, notably Bank of America and Citigroup, is bound to require far larger investments of taxpayer money, atop the more than $300 billion of taxpayer money already poured into those two financial institutions and hundreds of others.
But if hundreds of billions of dollars of new investment is needed ... what do taxpayers get in return? --NYTimes
Pelosi is on record as playing with the idea of nationalization; at the rate the Feds are purchasing stock in Citi and BofA, (and guaranteeing against loan-losses) it's a fait accompli.
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
Just another way to hand out pork and favors, I suppose.
HT Calculated Risk
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6 comments:
So basically you're in a twist because of a "nationalization" that isn't actually taking place outside your own paranoid nightmares of socialism.
A government striding up to an industry and simply seizing their assets and business is called nationalizing an industry.
When several key businesses in a large industry come to YOU and ask for money, that's not "nationalizing" anything.
When you basically just give them money without even getting so much as regular stock in return, that's called a bailout, not a takeover.
Just because the government adds stipulations--strings--to the use of the money that doesn't make it a sinister government plot. Nobody is being forced to take the money.
Well, actually, Scott, you recall that the first 6 or 8 Banks that received TARP funds WERE, literally, forced to take the money, by Paulson.
And I'm not 'delusional.' Your premise is correct: that an investor (in this case the Treasury/taxpayer) should get a return for the dollar.
Were I to make a counter-proposal, I'd simply force the liquidations instead.
Sorry, forced to take the money? Help me understand what you're talking about. Got some links to educate me?
Not handy, but you can find it.
IIRC, Citi, BofA, USBank, Chase, WellsFargo were in the room. First round of TARP.
Called there by Paulson, told that they 'would not leave' until they took the capital.
I understand why: look at "un-borrowed reserves" (search on my blog). What you find is that the Banks were BORROWING their reserve dollars en masse around 10/1/08.
Not a good position at all...
Actually, the gov't/banks created a "special" category of stock so it wouldn't "look like nationalization".
I am reminded of the old adage "if it looks like a duck, etc. etc."
In some cases, the "special stockholders" contributed 70% of current capital base of the banks.
Scott, this is today's news (http://moneynews.newsmax.com/streettalk/pelosi_nationalization/2009/01/26/175361.html)
House Speaker Nancy Pelosi (D-Calif.) says that the idea of nationalization, or perhaps partial nationalization, of America's leading banks is gaining currency among U.S. policymakers.
"Whatever you want to call it," Speaker Pelosi told ABC News, "If we are strengthening them (the banks), then the American people should get some of the upside of that strengthening. Some people call that nationalization."
Who am I to argue with Nancy?
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