Obama moves to nationalize nations banks

[HHSDad]

You mean we didn't nationalize parts of the banking industry with TARP???

 

What I have read is that they are considering nationalizing some of the bad loans . . . buying them from the banks

The Treasury Department forced the nine largest U.S. banks to sell them Senior Preferred Stocks and Warrants which are senior to common stock in these banks. The banks were forced to take the deal whether they wanted the TARP money or not. And to do Obama justice, it was done by Bush's SecTreas.

[Clyde]

You reading the same article or just refuse to see what is being talked about?

 

I am dead serious with that question.

 

First of all what is the basis for the article? The quotes I've read from Dem leadership is that they are against the idea.

 

So we have one guy saying it might happen??? Shouldn't there at least be a quote from a Dem or the administration saying that its being considered before we assume that it is?

[Mr.Network]

I don't think I like the idea either.

 

But I have a question. Didn't the Government already become "share holders" to some banks it bailed out last fall with the first plan? Can some one clarify that for me?

 

Not shareholders but warrant-holders. The TARP funds are treated like equity but really are debt. They accrue at a rather steep interest rate and give the government the ability to exercise options on the bank's stock if the value increases. IMHO, this is the best part of any bailout to date.

[Clyde]

Didn't FDR nationalize banks for a brief time?

[cch5432]

Didn't FDR nationalize banks for a brief time?

Not sure, but since I am of the belief that many of FDR's policies extended the Great Depression rather than ended it, I would not put it past him. But I can not say for sure.

[ladiesbballcoach]

Didn't FDR nationalize banks for a brief time?

 

I thought he just declared bank holidays and closed them but never nationalized them.

[Clyde]

But even as the situation becomes grimmer by the day, full nationalisation of the banking industry appears remote.

 

Asked about it on Wedneseday, new Treasury chief Timothy Geithner said: 'We have a financial system that is run by private shareholders, led by private institutions, and we'd like to do our best to preserve that system.

 

http://www.straitstimes.com/Breaking%2BNews/Money/Story/STIStory_331729.html

 

"Bad bank" may be where they end up going.

[Hatz]

Not shareholders but warrant-holders. The TARP funds are treated like equity but really are debt. They accrue at a rather steep interest rate and give the government the ability to exercise options on the bank's stock if the value increases. IMHO, this is the best part of any bailout to date.

 

Thanks for the explanation.

[5wide]

I just don't see it (I get what you are saying, but I hate the misused logic). Why would government ownership result in freed up money? Because they can print it? Everyone knows the government is operating at a huge deficit.

 

Because the government can go deeper into the well than any other organization...if they can't guarantee your money, nobody can.

 

The idea I heard previously was that the government would take over the "bad" stuff, allowing banks to get a lot of the red off the books and free them up to loan and operate freely once again.

 

Some drawbacks I recall being mentioned are 1) the same bad management that allowed the banks to get in that position to start with will still be there, and 2) it could be a reward for those banks who have been badly managed. If the government takes them over, the bad banks suddenly become the most attractive because they have the US government backing them. That means the banks that have been run well could suffer because of that.

[bballfamily]

Didn't FDR nationalize banks for a brief time?

 

The 'Banking Holiday' closed all banks so their books could be looked at. Finacially solid baks were allowed to reopen and the ones with a lot of bad debt were closed. Along with the new FDIC program this was to instill confidence in the banking system and encourage people to leave money in their bank accounts and not their matteress.