Nationalizing underperforming banks

Robert · Jan 19, 2009

“I remember a time when banks lent money to people. Now it’s the other way around.”
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There are reports that the banks aren't using bailout money to help with loans and unfreeze the credit system. They feel it's in their best interest to hold it back to pay off upcoming bad debts. So the stimulus is having the opposite effect intended.

Tom Friedman says some (Self) Shock Therapy is needed:

Mr. Obama and his economic team should convene the 300 leading bank presidents in the East Room and the president should say to each one of them something like this:

“Ladies and gentlemen, this crisis started with you, the bankers, engaging in reckless practices, and it will only end when we clean up your mess and start afresh. The banking system is the heart of our economy. It pumps blood to our industrial muscles, and right now it’s not pumping. We all know that in the past six months you’ve gone from one extreme to another. You’ve gone from lending money to anyone who could fog up a knife to now treating all potential borrowers, no matter how healthy, as bankrupt until proven innocent. And, therefore, you’re either not lending to them or lending under such onerous terms that the economy can’t get any liftoff. No amount of stimulus will work without a healthy banking system.

“So here’s what we’re going to do: we’re going to unclog the arteries. My banking experts have analyzed each of your balance sheets. You will tell us if we’re right. Those of you who are insolvent, we will nationalize and shut down. We will auction off your viable assets and will hold the toxic ones in a government reconstruction fund and sell them later when the market rebounds. Those of you who are weak will be merged. And those of you who are strong will receive added capital for your balance sheets, after you write down all your remaining toxic waste. I am not going to continue rewarding the losers and dimwits amongst you with handouts.”

Without this sort of come-to-Jesus strategy, we’re going to continue to just limp along. We’ll never quite confront the real problem because we don’t want to take the upfront pain. Therefore, the market will never clear — meaning start-ups in need of capital will be choked in their cribs and profit-making firms won’t be able to grow as they should.
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This doesn't sound like socialism. Is it un-American? Smart? Both? Or neither?

ruckusracing · Jan 19, 2009

Hell, it was the Govt that helped get the banks in trouble to begin w/. Gotta love Govt. which is a oxymoron for me cause I work for the local Govt, but in a good way!!!LOL

klebs01 · Jan 19, 2009

The funny thing about that is that the market would have accomplished that with out any tax payer money or government intervention. The government intervention has just worsened the problem and dragged out the solution.

mikendzel · Jan 19, 2009

Yeah, you guys hold those dastardly banks accountable!!! (where's panther city???)

http://www.city-journal.org/html/10_1_the_trillion_dollar.html :wow:

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Nationalizing underperforming banks

Robert Flies all green 'n buzzin

ruckusracing Well-Known Member

klebs01 Well-Known Member

mikendzel Anonymous

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Nationalizing underperforming banks

Robert Flies all green 'n buzzin

ruckusracing Well-Known Member

klebs01 Well-Known Member

mikendzel Anonymous

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