Republican Sen. Lindsey Graham of South Carolina stunned political observers on Sunday when he said that "the idea of nationalizing banks" must be kept on the table, even if it makes him "not comfortable."
Moments earlier, Rep. Maxine Waters (D-Calif.), who agrees with Graham, lamented that "the word 'nationalization' scares the hell out of people."
Indeed, many who support a policy of 'nationalization' say the term is neither an accurate description of the policy nor politically helpful. (For more, read Arianna's recent column, "Why is Obama Reluctant to Kill the Zombie Banks Threatening Our Economy?")
So what should 'nationalization' be called instead?
To enter our name-that-bank-seizure contest, drop your suggested replacement term in the comments section. We'll highlight the best suggestions in a post later this week and, and use the winner when referring to nationalization. As more economists argue that nationalization is increasingly a matter of when rather than if, it's a reference that will be popping up with rising frequency.
Economists Matthew Richardson and Nouriel Roubini entered their own suggestion on Sunday in a Washington Post op-ed. "Nationalization -- call it 'receivership' if that sounds more palatable -- won't be easy, but here is a set of principles for the government to go by," they write. But we can't see 'receivership' catching on. And what would the headline read? Feds Receive Bank?
One flaw of the term nationalization is that it doesn't convey the temporary nature of a government takeover of a bank. Nationalization implies that the government will seize and keep the institution, but the process is more a catch and release. The government seizes the bank on a Friday afternoon, guarantees deposits, reopens on Monday as it goes through the books and determines whether it can be made viable again. If it can, it's gradually sold off -- often in pieces -- bank into the private market.
What should that be called?
UPDATE: Here are a few early suggestions, pulled from the comments section. Several readers noted that the FDIC uses the term "intervention."
Consolidated Federal Financial Reorganization Program (CFFRP)
Emergency Public-Private Partnership
Bank Underwriting & Recapitalization Project (BURP)
Restructured Ownership And Rehabilitation (ROAR)