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Banks Will Be Nationalized

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January 22, 2009 – Comments (5)

Some experts have argued that U.S. banks should be nationalized.

Arthur Levitt, a former Securities and Exchange Commission (SEC) chairman goes a step farther: He says our banks will be nationalized.

“The whole question of ringing banks, of having good banks and bad banks doesn’t make sense. Clearly we’re moving toward nationalizing banks,” Levitt, a senior advisor to private equity firm Carlyle Group, told Bloomberg TV,

The government has to choose winners and losers among the banks, Levitt says. “Nothing less will work.”

That’s not the favored policy of the Obama administration, but “it’s being pushed toward that,” he says. “The whole idea of forcing banks to lend is a populist notion. To whom are they going to lend? I don’t think there’s demand from borrowers out there.”

The government can’t force banks to lend, Levitt says. “At most, the government can jawbone.”

Levitt sees the regulatory structure changing radically.

“There is no longer a brokerage industry for the SEC to regulate,” he says. “The SEC and the CFTC (Commodity Futures Trading Commission) are likely to be merged.”

Levitt fears over-regulation. “You can’t carry this too far,” he says. “Businesses already are choked by lack of funds. You can’t choke them more with regulations.”

Stock price declines make nationalization more likely, note others.

While bank nationalization is a last resort, “that last resort doesn't seem so far removed at this point, particularly because of valuations,” James Smith, chief executive of Webster Financial Corp. in Waterbury, Conn., told The Wall Street Journal.

© 2009 Newsmax. All rights reserved.

[Moneynews.com link]

5 Comments – Post Your Own

#1) On January 22, 2009 at 1:22 PM, SideShowMel0329 (57.89) wrote:

Well obviously when banks are left alone they fall to greed and corruption. Are there any other choices? Let them fail and we're all screwed.

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#2) On January 22, 2009 at 1:30 PM, jeffduby (21.93) wrote:

lol! The banks have already been nationalized. For all intents and purposes, the  american banking structure is already bankrupt. The only reason jpmorgan bank of america and other banks are still open is because we are literally propping them up with taxpayer money!

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#3) On January 22, 2009 at 1:48 PM, NCMichael (< 20) wrote:

Just because someone says something doesn't make it so.  Levitt admits (http://www.newsweek.com/related.aspx?subject=Arthur+Levitt&tid=relatedcl) that he's probably to blame for many of the problems that we find ourselves in.  So we should believe him now?  "Yeah, yeah, I was wrong then, but I'm right now!   Trust me!"  

If the administration says that they don't want to nationalize banks, then you must take them at their word.  Until they change their minds, of course.   

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#4) On January 22, 2009 at 2:37 PM, GeneralDemon (26.33) wrote:

A great example of double speak:

"I don’t think there’s demand from borrowers out there.” 

 "Businesses already are choked by lack of funds."

Soo... which is it, Mr Levitt?????

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#5) On January 22, 2009 at 2:42 PM, lquadland10 (< 20) wrote:

Supposly our money is covered by FDIC so give us our money. Let the banks fail we will just start new ones. Problem solved without nationalizing banks.

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