Obama on Bank Nationalization: Too Many Banks/Republicans

[girl gone mad]

http://pbaul.kedrosky.com/archives/2009/02/10/obama_on_bank_n.html

President Obama is on ABC Nightline tonight, and he is asked about bank nationalization. Here is the exchange from the transcript:

TERRY MORAN: There are a lot of economists who look at these banks and they say all that garbage that's in them renders them essentially insolvent. Why not just nationalize the banks?

PRESIDENT OBAMA:Well, you know, it's interesting. There are two countries who have gone through some big financial crises over the last decade or two. One was Japan, which never really acknowledged the scale and magnitude of the problems in their banking system and that resulted in what's called "The Lost Decade." They kept on trying to paper over the problems. The markets sort of stayed up because the Japanese government kept on pumping money in. But, eventually, nothing happened and they didn't see any growth whatsoever.

Sweden, on the other hand, had a problem like this. They took over the banks, nationalized them, got rid of the bad assets, resold the banks and, a couple years later, they were going again. So you'd think looking at it, Sweden looks like a good model. Here's the problem; Sweden had like five banks. We've got thousands of banks. You know, the scale of the U.S. economy and the capital markets are so vast and the problems in terms of managing and overseeing anything of that scale, I think, would -- our assessment was that it wouldn't make sense. And we also have different traditions in this country.

Obviously, Sweden has a different set of cultures in terms of how the government relates to markets and America's different. And we want to retain a strong sense of that private capital fulfilling the core -- core investment needs of this country.

And so, what we've tried to do is to apply some of the tough love that's going to be necessary, but do it in a way that's also recognizing we've got big private capital markets and ultimately that's going to be the key to getting credit flowing again.

All this talk of “culture”, “traditions”, and so on are an opaque way of saying that Democrats are terrified of nationalization because they worry about Republican name-calling. Further, saying that Sweden had five banks and the U.S. has thousands, so nationalization can’t happen here, is misleading. It ignores the relative GDPs of the two countries. What’s more, as measured by asset size, the problem is chiefly in the six largest U.S. banks which collectively account for the preponderance of the banking industry balance sheet. Muddying the issue by saying that we would need to nationalize “thousands of banks” isn’t helpful.

[debbierlus]

1. What a load of pure CRAP - we are NATIONALIZING THE BANKS - we just don't get any CONTROL

This is insanity.

Give the banks money without control over how it is spent. It is a load of crap. Shame on Obama.

[izquierdista]

2. But it is a reasoned answer

As opposed to an garbled mumble of gibberish, punctuated with stuttering, and delivered with major grammatical errors.