Legal Commentary

Krugman And Greenspan: Time To Nationalize Banks

By Big Tent Democrat

Krugman today:

Alan Greenspan, the former Federal Reserve chairman — and a staunch defender of free markets — actually said was, “It may be necessary to temporarily nationalize some banks in order to facilitate a swift and orderly restructuring.” I agree.

The case for nationalization rests on three observations. First, some major banks are dangerously close to the edge — in fact, they would have failed already if investors didn’t expect the government to rescue them if necessary. Second, banks must be rescued. The collapse of Lehman Brothers almost destroyed the world financial system, and we can’t risk letting much bigger institutions like Citigroup or Bank of America implode. Third, while banks must be rescued, the U.S. government can’t afford, fiscally or politically, to bestow huge gifts on bank shareholders.

Who disagrees with this? Besides shareholders in the banks? What does Santelli think?

Speaking for me only

Full post as published by TalkLeft on February 23, 2009 (boomark / email).