The case against bank nationaliztion

[grantcart]

Because the banks are your friend.


OK seriously when Greenspan and Lindsay Graham are advocating nationalizing banks you know there is something deadly wrong with the idea.

It is true that nationalizing a bank will wipe out the shareholder equity of the bank and the investors walk away with nothing. But guess what when FDIC takes over a bank the same thing happens.


If the federal government nationalizes a bank they will then become responsible for paying the bonds that the bank has issued. Bank nationalization would then result in a massive transfer of wealth from the taxpayer to the bond holder.


Rather than bail out the bond holder it is probably preferrable to set up a 'toxic asset bank' and let the FDIC take over a failed bank, transfer the bad assets to a federal bank that can nurse them back to health (and have more control over foreclosures) and then sell the newly formed bank for a profit with the profits going to help replenish a fund to help finance foreclosure relief.


Looking forward to hearing from someone with more experience on banking to give a more complete answer.

[anonymous171]

1. I knew it would turn out to be some big corporate welfare scheme. nt

[Barack_America]

3. The best way to smoke that out is to start floating the idea of major, permanent regulation...

...in addition to the nationalization. If they're looking for welfare, that should shut them up.

But, in the meantime, I'm half enjoying hearing prominent Republicans call for socialism. It sounds an awful lot like nails being pounded into a coffin. ;)

[grantcart]

4. just look who is cheerleading the effort and that will tell you a lot.

Now if there are a lot of union pensions that have bought bank bonds then I would reconsider, but I think we need a lot more detail on this one.

[Barack_America]

2. I say "let 'em fail".

As Obama noted, there are far too many banks in the US to even make nationalization feasible.

[uponit7771]

6. ...but let them fail slowly and not fast like during the late 1920s...sell them off slow

[grantcart]

7. as long as they are purchased by the FDIC it doesn't matter

The banks don't even close their doors for a single day.


A bank that is taken over by the FDIC and has its bad assets stripped and is either sold or recapitalized can start loaning out immediately while a bank with no liquidity cannot.

[uponit7771]

5. THANK YOU!! Another person who understands republicans LOVE rich people FIRST

[earcandle]

8. Why can't Obama set up gov banks, and just take our our housing and consumer debt

Adjust the mortgages to fixed  at a lower rate, and adjust
CCRD debt to low (5%) interest, and have those new government
banks across the country earn the interest on the repayment of
those loans?  And then give us jobs, and encourage us to save
by paying us 14% interest for doing so.  And have all of our
payroll taxes be processed in these banks so that Social
Security gets theirs, and the gov. banks have access to this
money to pay for budgets?  

Hey, why should we ever give the interest earned on our money
to private industry again?  They blew it in my view.  Let them
engage in business with the wealthy, and let the gov banks
deal with the middle class and the poor working out how to get
our quality of life back in place.  I hate the idea of any
rich people profiting on my tax dollars ever again. 

Am I missing something here?  

(BTW, whoever gave me my heart (smile), thanks for including
me.  I just have no funds to donate right now.  

I am fighting off banks who have raised my rates to 30%, whom
I cannot pay anymore, even after I have used these banks since
1981 and have never been late or missed a payment until Nov
2008.  Oh well.  If I am in the credit trashcan now, what are
my alternatives, and why should I bother to scrape up $1300 to
claim bankruptcy?  I just tell them that my focus right now is
rent and food, not banks.  They have done what they have done
and have priced themselves out of my market, so I cannot pay
at all now. I am detached, after crying my eyes out for about
two weeks.  I just don't care.  I want a government bank I can
put my money into that will protect my interest and not play
gotcha games or commit usury on me, because they can.  

[grantcart]

9. I understand your situation - unfortunately understand it a little too well lol