[Marxism] Greenspan Backs Bank Nationalization

[David Thorstad <binesi@xxxxxxxxx>]

Greenspan Backs Bank Nationalization
> http://www.ft.com/cms/s/0/e310cbf6-fd4e-11dd-a103-000077b07658.html?nclick_c
> heck=1
> by Krishna Guha and Edward Luce
> Published on Wednesday, February 18, 2009 by Financial Times
>
> The US government may have to nationalise some banks on a temporary basis
> to fix the financial system and restore the flow of credit, Alan 
> Greenspan,
> the former Federal Reserve chairman, has told the Financial Times.
>
> [Alan Greenspan, former chairman of the Federal Reserve speaks at the
> Economic Club of New York meeting on Tuesday, Feb. 17, 2009 in New York.
> (AP Photo/Jin Lee)]Alan Greenspan, former chairman of the Federal Reserve
> speaks at the Economic Club of New York meeting on Tuesday, Feb. 17, 2009
> in New York. (AP Photo/Jin Lee)
> In an interview, Mr Greenspan, who for decades was regarded as the high
> priest of laisser-faire capitalism, said nationalisation could be the 
> least
> bad option left for policymakers.
>
> "It may be necessary to temporarily nationalise some banks in order to
> facilitate a swift and orderly restructuring," he said. "I understand that
> once in a hundred years this is what you do."
>
> Mr Greenspan's comments capped a frenetic day in which policymakers across
> the political spectrum appeared to be moving towards accepting some 
> form of
> bank nationalisation.
>
> "We should be focusing on what works," Lindsey Graham, a Republican 
> senator
> from South Carolina, told the FT. "We cannot keep pouring good money after
> bad." He added, "If nationalisation is what works, then we should do it."
>
> Speaking to the FT ahead of a speech to the Economic Club of New York on
> Tuesday, Mr Greenspan said that "in some cases, the least bad solution is
> for the government to take temporary control" of troubled banks either
> through the Federal Deposit Insurance Corporation or some other mechanism.
>
> The former Fed chairman said temporary government ownership would "allow
> the government to transfer toxic assets to a bad bank without the problem
> of how to price them."
>
> But he cautioned that holders of senior debt - bonds that would be 
> paid off
> before other claims - might have to be protected even in the event of
> nationalisation.
>
> "You would have to be very careful about imposing any loss on senior
> creditors of any bank taken under government control because it could
> impact the senior debt of all other banks," he said. "This is a credit
> crisis and it is essential to preserve an anchor for the financing of the
> system. That anchor is the senior debt."
>
> Mr Greenspan's comments came as President Barack Obama signed into law the
> $787bn fiscal stimulus in Denver, Colorado. Mr Obama will announce on
> Wednesday a $50bn programme for home foreclosure relief in Phoenix,
> Arizona. Meanwhile, the White House was working last night on the latest
> phase of the bailout for two of the big three US carmakers.
>
> In his speech after signing the stimulus, which he called the "most
> sweeping recovery package in our history", Mr Obama set out a vertiginous
> timetable of federal decisions in the coming weeks that included 
> fixing the
> US banking system, submission next week of the 2009 budget and a 
> bipartisan
> White House meeting to address longer-term fiscal discipline.
>
> "We need to end a culture where we ignore problems until they become
> full-blown crises," said Mr Obama. "Today does not mark the end of our
> economic troubles... but it does mark the beginning of the end."


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