Re: [Pen-l] Bank nationalization (Was"Has Barack Obama's ...")

[Marvin Gandall <marvgandall@xxxxxxxxxxxx>]

Charles writes:

>  I'm not sure about this, but
> I don't recall an American tradition
> of any discussion of public ownership
> to revive
> except of course in the tiny socialiist
> and Communist left. Anarchist/libertarians
> are against government ownership, I believe.
> Well, actually, the federal government
> did some "commandeering" of the private
> sector during WWII.

Not to exaggerate, but the IWW and Debs' SP were not without influence in
the period before the First World War, and the CP and Norman Thomas' SP were
not without influence within the trade unions and the intelligensia during
the 30's through World War II.  US social democrats circulated the British
Labour party program calling for nationalization of the commanding heights
and state planning, while American Marxists and fellow travellers promoted
the Soviet model. The TVA was as American as apple pie, and many New Dealers
pressed for the extension of public ownership into the nascent broadcasting
and airlines industries, as in Canada. So public ownership (in the sense we
mean it) is not a wholly alien concept in US political history.

> On the Constitutional question
> that Sandwichman raised, there is
> Eminent Domain. If the feds give
> the banks billions, that would
> constitute the just compensation,
> so no violation of the Takings
> Clause. If the banks are
> insolvent, then their
> fair market value wouldn't
> be that much , so there
> wouldn't have to be just
> compensation.

The "good bank" idea, ie. a new state bank, proposed by Buiter and others
makes more sense to me. Why bother taking over the big private banks like
Citicorp and B of A or, even worse - as the administration proposes - to try
to breathe new life into the zombies by taking their worthless assets off
their hands and parking them in a "bad bank" at a huge cost to the public?
If the banks are nationalized, the shareholders and creditors will almost
certainly get the state to overvalue the assets and overcompensate them. I'm
sure you will not like their definition of "just compensation".

Better to just let the banks sit on their garbage until they are forced to
file for bankruptcy, and have a new massively capitalized state bank lend
directly to those in need, no? It may be the least likely outcome, but as
the state bank idea is already being floated in elite circles, it does
provide an opening to promote it more widely.



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