Quote Of The Day – On Bank Nationalization
By Justin Gardner | Related entries in Bailouts, Banks, Barack, Economy, Quotes
“It may be necessary to temporarily nationalise some banks in order to facilitate a swift and orderly restructuring. I understand that once in a hundred years this is what you do.”
- Alan Greenspan in an interview with Financial Times
Here’s more…
Mr Greenspan’s comments capped a frenetic day in which policymakers across the political spectrum appeared to be moving towards accepting some form of bank nationalisation.“We should be focusing on what works,†Lindsey Graham, a Republican senator from South Carolina, told the FT. “We cannot keep pouring good money after bad.†He added, “If nationalisation is what works, then we should do it.â€
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 â€allow the government to transfer toxic assets to a bad bank without the problem of how to price them.â€
Between Lindsay Graham and other Republicans starting to back this model, it looks like Obama will have all the political cover he’ll need to go forward with a nationalization plan.
I guess bipartisanship isn’t dead after all.
More as it develops…
This entry was posted on Wednesday, February 18th, 2009 and is filed under Bailouts, Banks, Barack, Economy, Quotes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
February 18th, 2009 at 8:07 am
If the banks aren’t acting with the top priority of establishing a new equilibrium for the economy, due to what makes sense for the banks themselves, then this alternative has to be strongly considered.
It’s useful and instructive to all of us that some folks are approaching this in what I would call a non-ideological fashion. I’m tempted to call it promising and encouraging, But let’s face it, if even a few well known Republicans are seriously considering such an approach, that speaks to how poorly the system is functioning under current circumstances. So while it’s encouraging from the perspective of meeting current challenges, it’s not very encouraging from the perspective of gauging how big those challenges are.
February 18th, 2009 at 12:54 pm
QUOTE OF THE DAY:
“When business in the United States underwent a mild contraction…the Federal Reserve created more paper reserves in the hope of forestalling any pssible bank reserve shortage. The “Fed” succeeded;…but it nearly destroyed the economies of the world, in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market–triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in breaking the boom. But it was too late:…the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed.” — Alan Greenspan, “Gold and Economic Freedom”, The Objectivist, 1966.