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Why Nationalizing Banks is a Terrible Idea

The United States government is discussing nationalizing banks.  (Story here.)  How can this be a good idea.  Consider the following scenarios: Scenario 1.  The government nationalizes banks.  It appoints an oversight board, comprised of members of Congress, people appointed by members of Congress.  Given the huge problem of pork, and given that members literally sold their votes to pass the bailout legislation: Does anyone seriously think that members of Congress will not lean on now-government-owned banks to lend money to local businesses?  Scenario 2.  The government nationalizes banks.  To avoid the problem of pork loans, there is no oversight board. What good will come of either scenario?  Maybe there is some Scenario 3 I am missing...continue to full post

Full post as published by Crime & Federalism on October 12, 2008 (boomark / email).