The Spectre of Nationalization

posted by Josh Ran

It wasn’t that long ago (I think we can count it in months actually) that the terms ‘nationalize’ and ‘banks’ just wouldn’t ever have been found in the same sentence. Ever. Check out this whole article in the NY Times entitled: “Nationalization Gets a New, Serious Look”. One small excerpt:

“In an interview Sunday on “This Week” on ABC, the House speaker, Nancy Pelosi, alluded to internal debate when she was asked whether nationalization, or partial nationalization, of the largest banks was a good idea. “Well, whatever you want to call it,” said Ms. Pelosi, Democrat of California. “If we are strengthening them, then the American people should get some of the upside of that strengthening. Some people call that nationalization.”

Yes, some people do. Namely, most of the other people in the world when faced with the government owning the majority share in a company. What does this mean for the banks? Citi and Bank of America lead the pack as poster children for the declining financial sector. Ken Lewis has some serious egg on his face as the train-wreck that is Merrill Lynch pulls up to the station, and Citi is hiving itself off into smaller and smaller chunks to keep it’s head above water. Both are desperately in need of more government intervention to avoid collapse. Whatever we call it, let’s spend some serious time thinking about what kind of conditions should be placed on any public money for the private banks.