Comments on: Nationalize Like Real Capitalists

By: Pat G.

Pat G. — Fri, 23 Jan 2009 00:31:06 +0000

Nah.. Reorganize under bankruptcy.

By: batmando

batmando — Thu, 22 Jan 2009 17:53:02 +0000

Added benefit to nationalization… once publicly owned, all (most? a lot?) of the dirty linen can be found, aired and perp walks en masse ensue?

By: Brendan

Brendan — Thu, 22 Jan 2009 16:00:03 +0000

Damn trigger finger…can’t…edit…post… Which witch is the right which?

By: Brendan

Brendan — Thu, 22 Jan 2009 15:55:06 +0000

The author talks about chopping the banks into bitty pieces, but obviously there are advantages to these giant institutions. While I personally prefer the already tiny credit union, they’re not for everyone or for virtually any business. For the large institutions themselves, these advantages include things like economies of scale and the ability for one branch to seamlessly work with another. For their clients, things like the ability to use the same bank across state lines and for large clients to work with a single entity (it’s hard to get a $5M corporate loan, much less two loans in different states for an expansion project, at your local credit union). On the other hand, the downfalls are painfully obvious right now.

This makes me wonder if a system more like the airlines have makes sense: instead of your One-World Alliance you have your Bank of America Alliance. Or perhaps more of a franchise system would be appropriate. One where B of A Washington can work cooperatively with B of A Florida, but are completely different entities under completely different management. That way if B of A Florida makes some stupid loans for a developer to build more condos in Miami, they’re small enough to fail. The right restrictions need to be put in place to keep lending between the institutions in check, such that they don’t act as a single entity anyway. At the same time, as a corporate customer is both Washington and Florida, my company can be served under a single umbrella. As we’ve seen, the stick approach doesn’t work (no bank CEO’s in jail that I know of and we’re back down to a handful of oil and telecom companies after splitting them up), so perhaps a carrot approach is more apt to work. This could be something along the line of FDIC insurance and Fed borrowing rates go up exponentially with size witch also takes into account how much lending there is between “franchises.” Banks can self-regulate their size based on the pros and cons of getting large. It’s not flawless, but certainly better than what we have now.

By: Mike in Nola

Mike in Nola — Thu, 22 Jan 2009 15:46:37 +0000

Here’s someone who disagrees:

http://ftalphaville.ft.com/blog/2009/01/22/51525/richard-bove-banks/?source=rss

Amazing that he still has a job. Shows that markets really aren’t efficient.

By: Greg0658

Greg0658 — Thu, 22 Jan 2009 15:44:25 +0000

from the primary post – However, if we recapitalize “too big to fail” banks without restructuring them, we will quite deserve our next mugging. We had better cut these monsters into little, itty, bitty pieces ….. Hopefully we will change what it means for a bank to run on commercial terms ….. nationalized banks should be recapitalized once, then managed to compete in it ….. Taxpayers should seek to extract maximum value

me now – Ive been on “to big to fight” myself

but the butt is how do you make sure the “maybe last go around” isn’t to setup and to send (from HealthSouth CNBC special last night) “the Family” into a lavish retirement?

and KISS cause I’m tired (oh can’t say that – defeat’g to this post) and have another life (well … I do)
:-|

By: Mike in Nola

Mike in Nola — Thu, 22 Jan 2009 15:33:20 +0000

I didn’t know Gaius Marius was still alive? :)

Of course all this is too obvious and sensible to happen. It’s as free market as you can get without letting failed banks just collapse as they would do without intervention. Instead, we will just keep feeding the zombies our flesh until there is a revolt from taxpayers who don’t like being devoured.