| It was just this past Sunday that we witnessed something rather odd on This Week. Republican Senator Lindsay Graham stated that, though he wasn't thrilled with the prospect, that nationalizing some banks should remain an option. Wingnut wonder Peter King agreed. It was then that Chuck Schumer disagreed and said, "I would not be for nationalizing. I don't think government is good at making these decisions." (He failed to mention that the bankers apparently suck pretty bad at such decisions as well.)
Today, the de facto temporary nationalization of at least a couple of the largest "zombie banks" seems increasingly likely. Bank of America and Citi seem to be the likeliest targets and their stock has lost about a quarter of its remaining value today, making the prospect of being temporarily seized even greater.
Thus, it seems Senator Wall St has had something of a change of heart.
Sen. Charles Schumer (D-N.Y.) believes that failed "zombie" banks, no matter what their size, should be taken over by the government, which should then wipe out shareholders, fire management, clean up the banks and quickly resell them into the marketplace. Such a move, he cautioned, should come only if the "stress tests" being conducted by Treasury Secretary Timothy Geithner determine a bank to be insolvent.
...
There is a good type of nationalization. I think that the [Treasury] Secretary was wise to do these stress tests," he said. "They're going to find some banks that are hopeless, that are zombie banks."
Those zombie banks, once discovered, he said, should be nationalized.
"Instead of keeping them alive for a long time," he said, "I do agree with people like Roubini or Mishkin -- and I think people would support this -- that the government should come in. And what the government would do would be: wipe out the shareholders, put in new management -- wipe out the old management and put in new management -- and then let the bank run sort of independently without day-to-day government intervention."
The fact that Schumer has turned the corner on this issue is pretty much the clearest signal one could possibly have that this is indeed going to happen. Given that today is Friday and the last day of the week is now becoming known as "bank failure Friday", it could happen sooner than most folks think.
We live in interesting times. |
