Skip to comments.As Banking (& 401k) Woes Grow, Debate Over Nationalization Intensifies
Posted on 02/25/2009 5:39:29 AM PST by Libloather
As Banking Woes Grow, Debate Over Nationalization Intensifies
Originally Aired: February 24, 2009
As turmoil continues in the U.S. banking industry, speculation is intensifying over whether the government should take larger ownership stakes in banks. Columnist Paul Krugman and former FDIC chief William Isaac weigh the pros and cons.
WILLIAM ISAAC: Well, the federal government has a lot of say in how banks operate. All these big banks have scores of resident examiners who live there. I mean, they're there every day. They go to all the committee meetings and the board meetings. The government has a huge say in these banks, particularly when they start suffering some problems and are taking taxpayer money.
I couldn't disagree more with the statement that these banks are insolvent or in need of a takeover. They're not. They're suffering through a very difficult economy, and, frankly, they're holding up pretty well.
I think those banks today are in better shape than the banks that we dealt with in the 1980s. We had 3,000 banks fail in the 1980s. And if we had -- if we had had mark-to-market accounting -- and that's where the SEC requires these banks to mark down marketable assets to whatever the current market price is -- if we had had that in the 1980s, every one of the major banks would have failed, absolutely.
And these banks are under very difficult circumstances, and I think they're holding up pretty well. They do need some help. We've got to help them get through this period. And the way to do that is to keep on putting capital in.
I'm not worried about subsidizing shareholders. My goodness, the shareholders of Citibank, for example, have gone from $300 billion in market cap to maybe $5 billion or $10 billion today. They've suffered a lot of pain, and those shareholders are you and me. We all have them in our 401(k)s. They were conservative investments.
Task for Feb 25: Begin media campaign to promote the need for nationalization of banks.
I’m firmly convinced that it is. The ‘Rats are RUTHLESS with our money, and they’ll rob us at gunpoint to get at our assets. They’re like junkies!
Nationalization won’t end with the banks.
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