Rescue Of Banks Hints At Nationalization

New York Times:

Last fall, as Federal Reserve and Treasury Department officials rode to the rescue of one financial institution after another, they took great pains to avoid doing anything that smacked of nationalizing banks.

They may no longer have that luxury. With two of the nation's largest banks buckling under yet another round of huge losses, the incoming administration of Barack Obama and the Federal Reserve are suddenly dealing with banks that are "too big to fail" and yet unable to function as the sinking economy erodes their capital.

Read the whole story: New York Times

Comments

[OSA23]

12:28 PM on 01/17/2009

the only thing that wdw505 offers to this forum would be less than a coherent sentence of jingoisms about 'letting them fall' and 'now way to socialism' without bothering his neural synapses to truly focus in on the problem:

a nation that has allowed the hubris of the 'free market' to dictate prosperity never wanted to deliver this 'promised land' to anyone who plucked down their monies for a piece of the golden calf. instead, they took the money and avoided the banks. they took the money, and avoided responsibilities: they took the money and care not for the potential fallout WHILE creating a system that would fall like the proverbial house built on sands. to all of those 'minds' yelling 'let them fall...' proves one thing to me - these 'minds' do not have ANY understanding about an economic system designed to fall and bury the 'common' man, woman, and child beneath the rubble.

the 'free market' shouldn't exist. just like we have laws against children owning handguns, the 'free market' shouldn't be allowed to exist, and a system of strict oversight needs to be put into place that assures sustainability over many generations. 'profits' as a motivation for going into business destroys.

[Americanium]

11:46 PM on 01/16/2009

I wish someone would stand up and say enough!!

Let them fail...We watched while the manufacturing base that supports this country for years be stripped away and shipped overseas.

Watched while business schools taught us that we are a service economy now.. The minute one sector of the so-called service economy fails..then all fails.

Take back our country.. No more cheap foreign imports!!!!!!!!!!!!

Lets the banks fail ..let the Chinese keep their products!!!!!!! Enough!!!!!!!!!!!!!!

[Americanium]

11:43 PM on 01/16/2009

If we had allowed these blood sucking pests to fail already the uptick would have started already....

Let the Mo Ef Ers Fail already..Enough!!!!!!!!!!!!

Let them Eat Cake!!!!!!!!!!!

[Antifascist-08]

03:15 PM on 01/16/2009

Well, its not going to be the first order of business, but i hope we do nationalize our banks. I think Obama should do with banks what he is planning top do with healthcare- set up a competing system of government banks and let the customers decide how much interest they want to pay on their credit cards.

Banks and other "money generating" businesses should not be allowed to control the currency in this country.

The whole credit based, consumer society must go.

Why leave the money to private, selfish interests?

[wdw505]

04:04 PM on 01/16/2009

you can keep your socialism thank you

[Antifascist-08]

04:21 PM on 01/16/2009

Oooh, the socialism card. Write back when you get off the Fox news addiction.

If we had nationalized banks right now they would be lending money instead of hoarding it and using it to buy up other banks. They wouldn't be charging outrageous interest rates and generating false value loans and all the other great things that "free market" banks have done to get us into this mess.

Its time to move on, like the rest of the civilized world. There is lots of socialism in this country right now, good and bad. The bad part is the socialism for the rich, not the average person.

By the way, Ayn Rand was wrong.

[leeman79]

02:55 PM on 01/16/2009

OK retardicans, we tried your way for 28 years. End result: disasterous failure. A bottomless debt, and massive job loss. That's it.

Keynesian economics (call it nationalization if you want) served us very well for 40+ years. Yeah, we hit a bump in the road in the seventies, but the system needed to be adjusted, not discarded.

Instead of attacking inflation, Nixon and Carter should have been addressing unemployment. I mean real jobs, not the low wage bullsh@t service jobs that Reagan created. The free market failure is over.

[wdw505]

03:10 PM on 01/16/2009

no we have not tried it my way.......we still have welfare along with too many other bad social programs.....we need a conservative in office.........then maybe

[Antifascist-08]

04:24 PM on 01/16/2009

Your argument would be a lot more compelling if you and your conservative friends actually had solution to offer. You don't, so we have to ignore your suggestions.

I think I know what "your way" is. No thanks.

[plwood01]

04:31 PM on 01/16/2009

Okay, at this point what do you suggest for the people losing their jobs everyday? The rich do not need welfare; well at least some of them don't because as I read here, Madoff's own sister is not destitute! What is your plan for poor people now? Even socialism is having a problem in that agencies and organizations that help those who lose their jobs make it until they can get another one! Further, what is your plan to keep stores open, at least some of them so that we can eat and buy what we need to survive? A Conservative in office? That just means that you want someone in office who does not care about the American and who would allow many families to remain homeless and actually parish under all this due to your trying to judge who should survive and who shouldn't! YOu obviously believe in natural selection a term that conservatives are very familiar with because of their attitude that the poor do not have the right to exist any longer in this country which would of course thin out minorities.

[Jazzcomedian]

02:52 PM on 01/16/2009

The commercial real estate debt collapse is next, along with the credit card debt collapse, and the banks, and the Fed knows this. The losses still facing these banks are immense, and the amount of capital infusion still needed is huge. Since investors will not buy bank stocks at this time, their only recourse for capital is the government.

This is global, as banks everywhere (Uk, France, Germany, Spain, Ireland, etc.) but India (saved due to strict regulation), are in serious trouble due to the reckless lending of the past few years. Iceland is now bankrupt as their banking system basically vaporized due to crazy lending. This is the perfect storm of financial calamity that the world is caught in. Even conservative, staid Switzerland, has had to bail out it's banks due to toxic mortgage securities. Warren Buffet was right in 2004 when he said that credit derivatives were financial weapons of mass destruction. They are now detonating with a vengeance destroying every bank and country in their path.

Our banks are on life support and all the coming bankruptcies, and job losses are only going to increase the pressure on their balance sheets. Distasteful as bailing out the banks is, the simple fact is that without a solid financial system, you have no economic activity. And lending into a declining economy is very risky and creates a catch 22. Everybody's pulling hard on the controls but the plane is still in a spiral. Nationalization is inevitable.

[Graywolf48]

12:52 PM on 01/16/2009

"Too big to fail." So what happens? The banks get taxpayer bailout money via TARP and use it to buy other banks and become even "too much bigger" to fail. Providian, swallowed by Washington Mutual has now been swallowed up by Chase. Yesterday I get a letter telling me my WaMu credit card terms will change since Chase is taking over. My interest rate will be going up, interest will now be compounded DAILY, grace periods and due dates may change and if I don't like it I can tell them IN WRITING within 20 days from this notice that "I'm opting out" and they will close my account. Fortunately, I have paid this account in full and will continue to use it and pay in full each month until a better offer comes along. Yes, we need to nationalize the banks, jail the corrupt and crooked bankers and set interest rates at levels that aren't blatantly and criminally usurious. I think we should bill the banks at the same interest rates they charge consumers for all the TARP money they've received until it's paid back in full. Otherwise I think the nation should foreclose on the banks.

[wdw505]

01:22 PM on 01/16/2009

no bailouts.........let the insolvent fail........."Too big to fail." no such thing

[MuchMadness]

07:34 PM on 01/16/2009

What about the FDIC? Let it fail, too? There is no easy, painless fix.

[Woodmist]

11:28 AM on 01/16/2009

I really don't feel anything but contempt for these banks and their losses. The risks they chose to take were insane. I say go ahead and nationalize them. The so-called free market ( thieves market is more like it) has proved that it can not correct itself and is a huge failure and that we the taxpayers are getting shafted. However, I expect Repubs to rant and whine " socialism, marxism, etc. but I have news for them: We can't wait any longer to see if the market can correct. It should be obvious but those that are blind with greed have no vision.

[wdw505]

11:34 AM on 01/16/2009

then let them fail......... no bailouts

[wdw505]

11:35 AM on 01/16/2009

nationalization is wrong......at any cost......

[ssgman]

12:04 PM on 01/16/2009

Why do you say that?

[vigilantwarrior]

10:38 AM on 01/16/2009

Good thing Aaron Russo isn't around to see this.

http://michaelfury.wordpress.com/2008/09/24/as-wall-street-is-transformed-a-reminder-from-aaron-russo/

[Antifascist-08]

04:35 PM on 01/16/2009

Excellent link. If this ever did happen, we would all just be slaves.

We are inching towards it. Now is the chance to get off the conveyer belt to slavery.

[LHoney]

12:05 PM on 01/17/2009

1. I'm not so sure we're "inching" towards it from my perspective.
2. How do we get off the conveyor belt?

[LeLoup]

08:04 AM on 01/16/2009

OK Kiddos of the right-wing persuasion! Time to drop the pretense that the "Market" knows everything better than anyone else. The banks are failing, and nationalization is the most sensical economic decision that ought to be taken. I'm a taxpayer and I say "Basta! That's it! Enough!!"

Shareholders and bondholders invested in those suckers. By definition, investing carry risk. They lost, time to move on and let the adults take over.

Oh! And brush up your knowledge of Swedish you learned at school; they know a thing or two about badass banks that don't really know how to manage risk.

[Antifascist-08]

04:57 PM on 01/16/2009

Its interesting how so many of the simpleton right wing folks think the "Market" will solve all problems. The market doesn't have a brain. It is not designed to be a social institution.

Simplistic things for simplistic brains.

Some people are always looking for a solution that doesn't require any actual thinking and can be actuated without any work on their part.

Pipe dream much?

[meemu]

07:12 AM on 01/16/2009

Well, as I understand things, the Fed controls our economy, they own the banks, and our government is just some kind of lackey.....on the other hand---

The Treasury would invest taxpayer dollars in exchange for preferred shares, which would pay a regular dividend and come with warrants that would allow the government to profit from increases in company stock prices.

that sounds as if the government would actually profit from letting the banks "do as they will" to the people, with all the outrageous fees, CC manipulation and crooked loans to people, and whatever else they're already doing. That sounds a bit like a bribe to me....and the government can then say "it's a private entity--there's nothing we can do" similar to their attitude on all the wrong things concerning the IRS and all the rest of us. I just wonder what are they REALLY up to....?

[000Jade000]

05:09 AM on 01/16/2009

I read elsewhere that BOA threatened to back out of the Merrill Lynch deal if Congress didn't see to it that they got their additional $20 billion.

They will be back for more. So will JPMorgan, Citi, and others.

I say if we fully nationalize the banks, we nationalize the Fed.

This has gotten way beyond ridiculous. I've got $100,000 student loan debt that will haunt me for the rest of my life. Nobody will wipe that debt clean for me. Yet, these banks have hundreds of trillions "worth" of toxins on their balance sheets due to their own criminality, and we keep rescuing them and rewarding their criminal endeavors?

I wouldn't be sad to see people start firebombing the effing banks.

[TheFriendlyAtheist]

12:01 PM on 01/16/2009

Nice to see more and more people coming around to my way of thinking; about banks that is, it'll probably take longer to get you to shed your superstitions but I can live with that. There is no need for private banking in this country, and if there is no need for an enterprize then it should not exist.Gov. run banks could lend at much lower interest, they don't have to make large profits, and would not put your savings into risky ventures just so the CEO can make a bundle of cash.

[wdw505]

12:40 PM on 01/16/2009

name a large US government program run well...........no to bailouts and nationalizing anything

[Antifascist-08]

04:46 PM on 01/16/2009

Amen. Well said.

[ZellaBee]

01:04 AM on 01/16/2009

Hints at nationalization? Are you kidding? This is not news to many of us. It is so f**king obvious that this is the plan. This whole bailout is a sham and a smokescreen/get ready for the collapse of the monetary system. WAKE UP fluoride drinking people.

[wdw505]

02:41 AM on 01/16/2009

i agree

[nomadicexpat]

03:38 AM on 01/16/2009

about the nationalization or the flouride?

[jacklambert]

10:27 AM on 01/16/2009

Got any $$$$s? Buy Euro's.

[MuchMadness]

07:41 PM on 01/16/2009

Right now the Europeans have to worry about the lack of natural gas due to the dispute between Russia and Ukraine.