Bank Nationalization

This sounds like a good idea (really):

Fed eyes Nordic-style nationalisation of US banks – Telegraph
The Fed has been criticised for its rescue of Bear Stearns, which critics say has degenerated into a taxpayer gift to rich bankers.

A senior official at one of the Scandinavian central banks told The Daily Telegraph that Fed strategists had stepped up contacts to learn how Norway, Sweden and Finland managed their traumatic crisis from 1991 to 1993, which brought the region’s economy to its knees.

It is important that neither the owners nor the upper management of failed banks be bailed out. Capitalism is the processing of risk through profit: allowing failing companies and executives to profit turns the free-market on its head. Currently in the United States, bad companies and executives are able to hold the economy hostage, because if they go down, their companies go down, and so do their lenders and borrowers.

“The law was amended so that we could take 100pc control of any bank where its equity had fallen below zero. Shareholders were left with nothing. It was very controversial,” he said.

Here here for confiscatory nationalization of failing banks and investment houses!

3 thoughts on “Bank Nationalization”

  1. I like George Will’s proposed rule on Stephanopolous, that if a bank gets bailed out by the Fed, nobody in the company is allowed to earn higher than GS(15) ($125,000).

  2. If you listen to “Conservatives” talk about the housing crisis, they all say “people need to learn responsibility.”

    But many of these same “Conservatives” will expect assistance from the government when a bank or corporation is in trouble. They especially support corporate welfare or government assistance for R+D.

    The best policy would be to offer no assistance to failing banks. But, obviously depositors need to be taken care of.

  3. I do apreciate how the Treasury Dept. embarked on the project overhaul the ancient and outdated laws, regulatory organizations, etc. The fruits of this (as Secy. Paulson pointed out) will pay big dividends for us down the road in gained productivity and flexibility.

    Bravo to Treasury!

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