Tuesday, January 27, 2009

No Bank Nationalization for the US...

In China, of course, the government has merely directed banks to lend more. Hasn't happened yet in the US as bank lending has fallen off a cliff. How about nationalization of the banks? Still a dirty word in the US, no surprise to readers of this blog...

"Explicit nationalization of financial companies has little support among key Obama officials, sources said. Treasury Secretary Timothy F. Geithner and top White House economic advisor Lawrence Summers believe governments make poor bank managers and cannot efficiently manage a vast number of institutions, according to some of their associates.

Taking over a substantial portion of a bank's stock and wiping out the investment of the firm's other shareholders could also precipitate a sell-off across the banking system as investors flee, fearing they could be next."

It's a futile fight, but I'll write on regardless: Summers needs to go.

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