Looks like it is time to add Comrade back to my name again:
Having tried without success to unlock frozen credit markets, the Treasury Department is considering taking ownership stakes in many United States banks to try to restore confidence in the financial system, according to government officials.
Treasury officials say the just-passed $700 billion bailout bill gives them the authority to inject cash directly into banks that request it. Such a move would quickly strengthen banks’ balance sheets and, officials hope, persuade them to resume lending. In return, the law gives the Treasury the right to take ownership positions in banks, including healthy ones.
The Treasury plan was still preliminary and it was unclear how the process would work, but it appeared that it would be voluntary for banks.
The proposal resembles one announced on Wednesday in Britain. Under that plan, the British government would offer banks like the Royal Bank of Scotland, Barclays and HSBC Holdings up to $87 billion to shore up their capital in exchange for preference shares. It also would provide a guarantee of about $430 billion to help banks refinance debt.
Now before I ask my question, let me state right now that I am working from a position of profound ignorance- imagine Sarah Palin discussing evolution and irreducible complexity. I have no idea how this plan will be implemented, how it will be managed, what will happen, etc.
Now, the question- if we do, in a sense, nationalize the banking system, what impact will this have on privacy issues? I can imagine nothing this administration and Cheney, not to mention the drug warriors, would want more than the ability to have unfettered access to depositor information.
And before you laugh and call me paranoid, remember what has happened the past few years.
*** Update ***
From the comments:
I think using the term “nationalizing” is dangerous here precisely because it leaves the impression that the government will be running the banks. Really, it’s more like the banks got a new round of investors who just happened to be the taxpayers. Now those new investors have as much right to look at the books as any other investor (or, at least they should have that right), but that does not mean the government will manage the day-to-day operations of the bank or be able, in John’s fear, look at depositors private information.