Here:
Despite criticism from fellow Republicans, U.S. Sen. Lindsey Graham of South Carolina Monday defended his statement that the U.S. should consider nationalizing some banks.
Critics, including the chairman of Charlotte-based Bank of America and many politicians, have slammed the idea. That doesn’t bother the outspoken Graham.
“Politicians are worried about words,” he said Monday. “I’m worried about outcomes.”
Graham said the government has already poured billions into banks with little to show for the economy. Bank of America, which has received $45 billion in bailout money, is currently worth $27 billion in market capitalization.
“The truth is we’ve put more money into the Bank of America than it’s worth,” Graham said. “That’s not nationalization. That’s just stupid.”
Graham broached the idea Sunday on ABC’s “This Week.”
“This idea of nationalizing banks is not comfortable,” he said then, “but I think we have gotten so many toxic assets … that we’re going to have to do something that no one ever envisioned a year ago (and) no one likes.”
His comments surprised many Republicans.
“That’s going above and beyond being a maverick,” said Glenn McCall, York County GOP chairman and a Bank of America executive. “That’s saying that socialism in our country would work better than letting folks use their God-given talent to create and foster economic growth.”
I don’t know what is the most surprising aspect of this story- that the most lucid description of what we are doing under TARP has come from Lindsey Graham (“The truth is we’ve put more money into the Bank of America than it’s worth,” Graham said. “That’s not nationalization. That’s just stupid.”), that Lindsey Graham now seems to be openly agreeing with Krugman, Roubani, and others, or that the Bank of America exec thinks that dumping billions into failed businesses isn’t socialism and that boatloads of money is not only a talent, but a God-given one at that. Then again, you do always hear the saying that “God must love the poor, because he made so many of them,” so maybe McCall is on to something and America has just been blessed with a lot of “talented” people.
*** Update ***
LauraW reminds us that there is some must see tv tonight on PBS, as Inside the Meltdown will be playing. A preview: Never mind. The preview is screwing up the page.
Set the DVR.
Laura W
TeeVee reminder: Frontline "Inside the Meltdown" 9EST.
Homonym reminder: hear the saying
sgwhiteinfla
If its socialist for the government to give the money isn’t is socialist for Bank of America to accept it. I say if they don’t want socialism then refuse any more TARP money and return that that they have already been given. Otherwise McCall should STFU when grown folks are talking.
I swear, have Republicans EVER made sense?
Martin
This whole business with Lindsay Graham making sense is really creeping me out. If any of y’all notice your neighbors being beamed up to heaven, give a hollar, because I think the day of reckoning draws nigh.
ThymeZoneThePlumber
Graham is Forrest Gump. He will sometimes say something that makes sense. But he is still developmentally challenged.
Okay, he’s still a stupid fuck.
Stuck
I say it again, I’m dumb as a rock on finance stuff. But from the beginning of this mess it has been painfully obvious to me that the finance industry is so deeply clusterfucked, the only way to un-fuck it is for the Government to take over, at least for a while
And it gives no comfort to agree with the Carolina Huckleberry. I’ m just glad to be already poor.
Zifnab
Why is it only a lucid description when a Republican says it? No offense John, we all fall into this trap, but it seems like the DFHs can spend half a year commenting on the ridiculousness of the TARP program (why buy them for $50 billion when you can hand them $100? Because THAT DOESN’T MAKE ANY SENSE!) but it only becomes insightful down-to-earth commentary when a right-leaning Republican says it.
Kinda like when Pat Robertson mentions that maybe Rush isn’t being patriotic when he asks for the current administration to fail.
It’s like living with retarded parents. "Mom. Mom. The house is on fire. Mom. We have to get out of here. Mom. Smoke. Fire. Danger. Danger. Mom. Help. We’re gonna die."
"Oh, look dear. The house is on fire. We should probably get out of here and call the fire department."
Such good parenting!
Nethead Jay
@Martin: Yeah, I wonder if there’s a fellow with red horns and a tail putting on ace skates somewhere. Don’t know what’s more astounding, that any of the current crop of Repugs could get those words over their lips, yet alone think them, or that it was McCains abominable wingman.
MaurS
Graham better be careful or he could end up one of these:
http://gawker.com/5155154/obamas-elf
Anton Sirius
@Zifnab:
To be fair to John, I don’t recall any DFH putting it quite as succinctly as that.
Now, who’s launching the investigation into what happened to the real Lindsay Graham, and who this impostor is? My money’s on Kevin Kline.
jnfr
We just finished last night’s documentary "House of Cards" from CNBC. Comprehensive look, step-by-step, at how the housing bubble grew and imploded. We’re watching "Meltdown" tonight for dessert.
Zifnab
@Anton Sirius: Quite as succinctly? What? You needed someone to dumb it down for you? Print out all the blogs commenting on why they thought the TARP was a bad idea and you could kill a fucking forest. Millions of voices cried out, "Don’t do this you crazy stupid fucks!" and no one listened. One crotchity old wanker from South Carolina who was – until yesterday – happily goose stepping along with his buddies in opposition to the Porkulous package, mentions how maybe it wouldn’t be such a bad idea to nationalize the banks rather than keeping them in the financial equivalent of Terri Shaivo, and its fucking news.
Fuck that.
John Cole
Oh, wank off Zifnab. If you can find anyone out there who put that in so few words so clearly that the bubbas that make up half this country can understand it, I will credit them.
John Cole
If anything pisses me off, btw, it is this bad faith argument that I am somehow still beholden to Republicans.
Just Some Fuckhead
Lindsay Graham better watch out or McCain is gonna stop hittin’ it.
Ed Marshall
The deeper I try and understand this stuff the less I understand. When he says "nationalize" does he mean buying a controling interest? Does that mean the taxpayer gets their money out after tier-2 capital preffered stock non-voting holders? Do you just fiat take their ass over and wipe out the shareholders? What happens to the bond holders? All of these ways of doing it have consequences and downsides and upsides.
Just Some Fuckhead
@John Cole:
Noted.
srv
In the battle to win hearts-and-minds, we need to take control of the language. We REALLY need a new word/phrase for "privatization."
I was thinking "Free Market Safety Net" or "DeFriedmanization." I’m sure y’all can come up with something better.
Tonal Crow
The *least* surprising aspect of this story is that the Chuck Schumer (DLC-NY) said:
GOP him and his DINO friends.
Stuck
@Anton Sirius:
That’s because the elected DFH’s, per usual, are afraid their own shadow might get called socialist by some wingnut and it’s a short jump from that to EEEgads Teh Liberal.
So it’s left up to we false personas and your odd wingnut to speak truth to scarddy cats. What a country!
headpan
As always, LindsAY is full of shit. He’s doing his little "tough talk" routine he likes to do now and then to look all mavericky. But that’s all it ever is, just talk. I’m not particularly interested in his fake dramas of taking on fellow republicans when it’s just the same ole bullshit.
Stuck
@headpan:
Maybe. Lord knows it wouldn’t be the first time. But I suspect the writing on the wall is beginning to be noticed by even the purest wingnut, and shakiest dem.
DougJ
People may not like to hear this, but the Senate Republicans are not the embodiment of all evil. Mitch may be as an individual. But there are definitely issues — like stem cell — where a lot of Senate Republicans crossed over and did the right thing.
I’m not saying that will be the case here. And Lindsey has a long record of saying one thing and doing another. But I’m not ready to reject this out of hand.
Tonal Crow
@Ed Marshall: I don’t know what Graham is saying, but I envision nationalization as being temporary, wiping out the shareholders but preserving bondholders’ (and other creditors’) existing interests, wiping out senior managers, and using the taken-over bank as a conduit for the feds to resume normal lending. When this crisis blows over, we can then sell the bank to private holders.
srv
Wow, I meant NATIONALIZATION, not privatization
DougJ
How about the Suck On This Plan”?
John Cole
You know, this post at Sadly No! really pisses me off. There is mockery, but the abuse they heaped on him before the picture was uncalled for and inexcusable.
Ed Marshall
That’s Tintin, he’s gay, I’m not, I’m not getting involved.
TenguPhule
He lacks the bullet in the ass.
TenguPhule
Just mostly evil. And stupid. And insane.
Stuck
@John Cole:
I haven’t been over there for awhile. Too much personal animus and almost blogstalking toward their targeted wingnuts.
D-Chance.
Then again, you do always here the saying that “God must love the poor, because he made so many of them,”
Damn, Cole, proofread before posting…
Ed Marshall
That’s the rub. If you buy a controling interest you are subordinate to the creditors. They get paid first, which throws a monkey wrench in temporary. No one really knows what normal lending is supposed to be either. In the Latin American style national bank takeover it wound up meaning "loan to the governments friends" and created serious clusterfucks.
I’m not shitting on the idea, but I hope there are some geniuses out there working something out it’s just not that simple.
srv
@John Cole: I thought he was a DougJ creation.
Stuck
@D-Chance.:
I herd it too.
Laura W
@Stuck: I certainly did my part to make it write in #1.
John Cole
All of you can…
Nevermind. I probably won’t spell my insult rite.
Stuck
@Laura W:
I sea you did.
Just Some Fuckhead
@Laura W: Maybe drop him an emale next time? That way he doesn’t feel picked on..
Laura W
@Just Some Fuckhead: Unless I put: "RE: BSG" in the massage line, he ignores my emales. I’ll try: "Re: The Stealers"
Just Some Fuckhead
@Laura W: I can dig that. I sent him one email once and he ignored me.
Elie
Ed Marshall # 15 —
There you have it…the REAL issue: How do we define "nationalize". In fact, many may want it but want cover to call it "something else".
In fact (from MY limited understanding of events and issues), its how to control and pace the bankruptcy of these banks so that they don’t all don’t all fall off the cliff at the same time…
Dealing with the bleeding of the banks and our economy is something like how to take a limb off of someone trapped by (a falling economy?) a falling bridge after an earthquake…you have to get em out and the whole structure is unstable so who knows, maybe it falls on all our heads. So lets get about it…you need ties (to minimize the bleeding) and a saw. The patient will pass out once the pain reaches a certain point but they will scream for a long time….You hope they are strong enough to take it and resuscitate them aggressively once they are out…
Lord have mercy on us…we havent even begun to see all of the reality of this yet (I believe)
TenguPhule
NOBODY EXPECTS THE GRAMMER INQUISITION!!
Our Three main weapons are surprise, snark, spellcheck and fear…
Our Four main weapons are bad puns….
Our Five main weapons are death from above….
Rainy
Well, at least he’ s not following McCain and others on their opposition to everything. I think he was playing politics with the stimulus though.
Bad Horse's Filly
I need to vent. President Obama and VP Biden were here in Colorado today and a handful of idiots (hundreds! according to local news) gathered to holler PORK! And of course the local media covered it like they represented the majority opinion in the state.
Why don’t the democrats have a plan to counter these idiots and control the message? Are they incapable of putting a Senator, member of Congress or Governor in front of a camera and repeating ad nauseum the fact that the bozos who got us into this mess have no credibility whatsoever when it comes to fiscal responsibility? Really is it that hard to do?
I know it sucks that we live in a sound bite world, but that’s the game, so at least learn how to play it.
End of rant.
ATinNM
We’ve been talking about the need for nationalization for months on European Tribune.
Back in October "Nationalisation is the solution" was published. (For some reason I can’t link directly to the diary. You’ll have to Google it.)
From the diary:
Right now there are two diaries up discussing nationalization.
Brian J
In only a very small way, the people who are against nationalization have a point: government run banks would probably be very bad. But nobody is proposing that the government take over the entire industry and that there will be no private competitors allowed, ever, or at least nobody within the mainstream. Instead, people are proposing, as many have acknowledged, what amounts to forced bankruptcy, where the government would take over the bank for a certain amount of time and then privatize it once the financial system was stable. Is this a great solution? I’m guessing not, but if a large portion of our banking system wasn’t thought to be insolvent, nobody would even be talking about these solutions.
I don’t have the necessary expertise to know what is the best course of action, either generally or specifically. But there seems to be a growing consensus that some sort of temporary government involvement, besides simply throwing money at them, is what’s necessary for the banks that are insolvent. Note that this wouldn’t, as far as I can tell, apply to banks that are in decent shape.
Those who vehemently oppose any government involvement, aside from happily accepting taxpayer money, seem to be responding to a solution that nobody is proposing. What a sad state of affairs.
devopsych
Either cultivate your buddy system networks or hone your Rambo survivalist skills, ’cause this thing is over.
headpan
I have never seen/heard him do anything to make me believe otherwise. As if this is different. I don’t think so.
If I heard something from the mouth of a republican whose words have been consistent with his actions, I might pay attention.
Ed Marshall
It’s whose ox get’s gored.
As opaque as TARP was it was capital injection in exchange for preferred stock. The idea was if you make it out on the other side we get our money back, plus interest before anyone else gets paid. You are doing the shareholders a favor because if you had forced the capital injection in the form of general stock you dillute the value of the shareholders and they would have pennies now instead of a few dollars. You are goring the ox of the preferred stock holders, because now they are in line behind you to pick the bones of what’s left.
The other way to do is to buy the thing out in general stock, now you have gored the shareholders ox, but if it all goes tits up in this scenario you’ll get whatever is left after the tier-2 capital gets it’s slice of the pie.
The other way to do it is to line up the damn boardroom and shoot the bastards and declare the thing peoples property. This could well result in some serious capital flight (though I’d be damned if I can figure out where it would go, but they would probably find somewhere), bank runs, etc.. but it’s probably the most aesthetically pleasing.
Comrade Mary, Would-Be Minion Of Bad Horse
I’ll see your Graham and raise you a Greenspan.
Brick Oven Bill
I am willing to trade Lindsey Graham for Jim Webb. Straight up. I’d even throw in a pizza party and Alan Greenspan.
You could convince me that bank nationalization made sense, if the federal government was not run by Robert Rubin and his disciples. Sweden had a legitimate government when they pulled it off.
I get the distinct feeling that things will have to break and then be fixed. James Madison has nothing to be ashamed of though. James Madison did an excellent job. France is on its fifth Republic since 1789. Haiti simply disintegrated after 1804.
devopsych
Alan Greenspan is a head in search of a pike. Maybe we will exhume it in ten years if we survive.
Martin
No, we need people to grab their knickers and face reality. Goddamn this country is full of fucking chickenshit reality deniers and the last thing we need to do is enable that. Why not just say that Jesus is going to take over the banks?
Obama: We’re gonna Jesusify the banks. As Romans 13:8 says, let no debt remain outstanding, except the continuing debt to love one another, for he who loves his fellowman has fulfilled the law. The banks have outstanding debts and Jesus, using the tools of the Commerce Department and FDIC will cleanse these institutions of their sins and return them to the people, clear of debt and full of goodwill toward American voters. The sad thing is that it’d probably work, but fuck, can we at least try and steer the ship in the right direction?
How about this instead:
Obama: My fellow Americans, we’re going to take over the following banks because the bankers have fucking failed. We gave them rope and they hanged themselves and the American public in the process. We’re going to take them over, take away some of their rope, bury the executives that fucked up, break them up a bit, and turn them loose again like neutered little puppies. If you have stock in these companies, you’re fucked. Sorry, but the choice is $60B in shareholder value or $6T in account holder value. The choice seems pretty clear to those of us running the country. If you’re pissed, Phil Gramm is currently hiding out in Texas. Take it up with him, he was the one handing out the rope.
Church Lady
@Tonal Crow – Schumer is worried about his campaign contributions drying up. Between the NY Bankers and Wall Street, his campaign war chest is probably starting to look a tad empty. If the government starts taking over these entities, he’s screwed – the government won’t be making campaign contributions to Chuckie.
J. Michael Neal
Unfortunately, that’s not the case. Somewhere along the line, the bondholders who made risky loans have to be given a haircut, too.
John Cole
That show was depressing.
headpan
As for this Paulson "conversion" on capital injections, I have to ask, if we pay taxes for government and the government bails out these companies, then why in the world shouldn’t the government own those companies with taxpayers getting what benefits, if any, may result?
Ed Marshall
True, I oversimplified.
Xecklothxayyquou Gilchrist
@headpan: If I heard something from the mouth of a republican whose words have been consistent with his actions, I might pay attention.
If you find such a creature at all, capture him and hand him over to the museum.
TheHatOnMyCat
@Brick Oven Bill: You can’t haaaaandle Jim Webb.
Say this in the voice of Jack Nicholson. Its meaning will become clear then.
Laura W
@John Cole: Could be worse. You could be watching it on your birthday.
That last scene gave me full body chills, and not in the good way.
Phoenician in a time of Romans
The deeper I try and understand this stuff the less I understand. When he says "nationalize" does he mean buying a controling interest?
My cynical interpretation is that it involves spending good taxpayer money to buy worthless assets from Republican cronies who have sucked them dry.
Look for "restructuring" efforts prior to government acquisition. That will be a sure sign the shit is being concentrated to stuff down taxpayer throats.
Brick Oven Bill
I don’t have to haaaaaandle Jim Webb TheHatOnMyCat. I respect Jim Webb. Is that clear?
TheHatOnMyCat
@Brick Oven Bill: You respect a Democrat mensch?
Okay, drinks are on me. Fill ’em up, barkeep.
Martin
Why? The government prints currency, runs Social Security, and a host of other programs that are run very well. The FDIC has been running banks for decades and I can’t recall anyone pointing to a situation where they’ve fucked up – and that’s working with already failed institutions.
I’m not suggesting that the government does efficient well, but they’re pretty good at doing effective. The IRS is not efficient (stupidly so) but they’re actually pretty effective with the task and resources that have been handed to them. They deal with hundreds of millions of tax filings each year, all under massively arcane rules, and in my experience manage to get a check in my account in a matter of about 2 weeks after I file – and they’re slow to find tax fraud, but they seem to do an okay job of finding it. Same with the Postal Service and Amtrak and NASA and many of the other agencies that Congress likes to regularly fuck over. They’re effective if not all that efficient.
It’s too easy to bash the feds at sucking at everything, but government is unique in having the challenge of having to make something work in all situations. BofA can turn customers away that are too hard to service – they can pick and choose their markets. The fed can’t – and that distinction is why they appear to be bad at what they do sometimes. Nobody dares bash the military for being wasteful, because their charge is to simply get the job done – and if that means getting some of their shit blown up, so be it. They can’t look at Afghanistan and say ‘sorry, that’s not consistent with our business strategy’. Neither can the IRS or Social Security or the FAA.
The difference with nationalizing the banks is whether they are tasked with providing an all-encompassing service or not. Some things would apply – like federal accessibility laws that don’t apply to business. That’ll cost. BofA can tell disabled people to go fuck themselves but BofA run by the feds can’t. I don’t think we should take that as a sign of government failure or mismanagement, though. No doubt the GOP will, but they’ll call it failure no matter how good they do.
Brick Oven Bill
Wrong! The correct answer is ‘crystal’.
But cheers regardless.
JasonF
I wonder how many people realize that the way we got out of the Savings & Loan crisis was — you guessed it — nationalizing the banks. That’s what the Resolution Trust Corporation was. Obviously the scale is much bigger here, but the principles are not that different.
TheHatOnMyCat
@Brick Oven Bill: ‘Nother drink for my dad over here!
db
Holy cow! Still going through the Frontline online video (a lot of related analysis and interviews that are making this long but worthwhile).
This has to be one of the top 5 pieces Frontline has ever put together.
… now I am sure I will be corrected that it is actually 11th best….
serge
Oh, Lindsey. Give it up…give up John McCain, he’ll never marry you despite all of his promises. Cindy will never allow it (btw, she’s got all the dough).
And for the love of God, please stop embarrassing (we) the few citizens of your state capable of being embarrassed. There are many more of us than you might think.
Fulcanelli
@Bad Horse’s Filly:
I hear tell pork is necessary to bring home the bacon.
Banking any more sophisticated than balancing my checkbook when we’re about a month away from losing our fucking house and both our cars is above my pay grade, but why the hell hasn’t anybody besides me thought of forcing the pasty faced, ass raping pricks running the bailed out banks to loan the Big 3 automakers the billions of dollars they need to keep them out of bankruptcy?
Or is it just too simple?
AhabTRuler
@db: Pretty much their whole series on Iraq, Torture, Cheney, the whole nine on Bush, is breathtaking and painful.
kay
@Bad Horse’s Filly:
I need to vent. President Obama and VP Biden were here in Colorado today and a handful of idiots (hundreds! according to local news) gathered to holler PORK! And of course the local media covered it like they represented the majority opinion in the state.
Does this require a response, though? I could be wrong, but doesn’t yelling "pork!" just seem like a completely inadequate and almost quaint response to a problem that is this big?
Members of Congress shuttling money to districts may or may not be a problem, but is it anything close to THE problem?
I don’t know. It feels jittery and scared here in heartland-rust-belt-lower middle class land. That’s just my gut. A lot of people who rely on wages don’t have a job. In Arizona, they’re new at foreclosure, right?
While "pork" is always a reliable applause line, depending on of course, if the money is coming to your district, it feels utterly beside the point.
To rehash the old burning house line, it’s as if you’re standing watching your house burn, there’s a group of frantic people pouring water on it, and OVER THERE is another group standing around saying we should not be wasting all that water on THAT house. It’s a "debate" but is it one you’re interested in having, or even hearing?
Fulcanelli
And in related news… A small, owner operated jewelry store not far from my house got hit tonight, just a few hours ago.
Details at eleven…
Move along, nothing to see here.
Martin
Was it part of this rally, featuring Malkin Donuts.
Laura W
Present for DougJ.
PBS Frontline producer Michael Kirk will be online Wednesday, February 18 at 11 a.m. ET to discuss his film "Inside the Meltdown," which investigates the causes of the ongoing economic crisis and examines what government officials didn’t see, couldn’t stop and haven’t been able to fix.
kommrade reproductive vigor
@Brick Oven Bill: No mention of electric railroads or potatoes. I call fake BOB.
question mark and the mysterians
I suspect Lindsey Graham is against any more money for the banks purely because that is the path Obama’s Treasury Secretary is going down. If Geithner were denying the banks money, Graham would be howling about how we need to be showering the big financial institutions with cash. It’s nothing more than juvenile opposition for spite’s sake.
Jim
Yesterday I watched a bunch of "American Greed" episodes on CNBC as well as "House of Cards." Now I’m watching "Inside the Meltdown." I recognize that capitalism is the best system we have, but the capitalists are bound and determined to ruin it. There really needs to be long – no, very long – jail sentences for the whole lot of those bastards on Wall Street, the mortgage brokers, the "flippers" who bought multiple homes, and members of Congress who goaded the making of loans to subprime borrowers. If they were the only ones hurt I wouldn’t mind, but people who have been careful, played by the rules, and acted conservatively in dealing with credit are getting hurt badly now too. What a lesson for our children.
Silver Owl
Graham figures out that not all business people are prince charming always willing to please the fairytale republican he man manly man.
I’m suppose to be breathless with the Graham self discovery. Sorry. Color me unimpressed. He’s too old just now be out growing made up stories.
Stuck
Query. does any one else in BJland get fluxating numbers of comments at times. Like this time it’s 62 on this thread, when there’s actually 80. Or do I need to start sniffing glue.
Bad Horse's Filly
@Martin: Yeah, that was them. Swastika Guy, now there’s something they didn’t show on the news tonight. Liberal media my ass.
You know, I’d welcome an opposing view of the current administration and policies if it was an actual discussion of what’s really going on, which I suppose is my real frustration. I was hoping when there was a president willing to have an intelligent conversation, the talking heads would welcome the challenge.
Silly me.
Rontre'l
Before we heap too much praise on Graham we must realize that his nationalization stance is not surprising at all. Just pay attention to his BS speeches on the stimulus, and ask yourself who the stimulus stands to benefit. Then think for a second whose asses will be saved by nationalization. Graham is not being bold or mavericky – he is trying to protect the interest of the same people he always has. When he speaks up for the spending that helps the little guy I will really be shocked.
Andrea
Re DFH’s and nationalization, Michael Moore wrote in HuffPo that the auto companies shouldn’t be bailed out for more than they’re worth.
Zifnab25
@John Cole: From Brad at SadlyNo, circa September ’08.
Succinct argument against the bailout. Links to an argument for nationalizations. But he’s a DFH on a low rent blog, so who cares, right?
I’m not saying you’re any more beholden to Republicans than anyone else. When I hear Lindsay Graham talk about intelligent economic policy, I reflexively bend my ear a bit more than when I hear it for the thousandth time on Digby. And when I hear Arlen Specter or John McCain talk about our nation’s commitment to discourage torture, I can’t help but give their worlds a little more weight than when Feingold or Kennedy says it.
But given their voting records, that’s a bad thing. "Spectering" got turned into an adjective for a reason. These guys aren’t sincere. They’re not honest. They pay lip service to the idea, then take the policy out back and strangle it with piano wire. If Lindsay Graham gets in front of a mic and says, "Maybe nationalization isn’t a bad idea" he should be boo’d off the stage for coming so late to the game. Then Geithner should get up there with a concrete policy we actually plan to use instead of forcing us to hear wandering open-ended considerations from one of the most insincere Congressmen of my generation.
It’s too late to wonder. Either get on the bus or get off the track. If Graham is serious about nationalization, write up a bill and put it on the table. Otherwise, stfu and get out of the way. He’s in the minority for a reason. As of last November, people weren’t interested in his ideas.
kwAwk
What can be achieved by nationalizing the banks that can not be achieved not nationalizing the banks?
Nothing really.
It seems to be all about punishing the stockholders.
Stuck
It’s not a matter of whether or not Graham is serious about Nationalizing banks. Nobody in congress wants to take such a step. And democrats especially so, for fear of getting smeared with the socialist charge. And for wingnut’s, it’s even a bigger ideological step into the void and disfavor with their frothing anti-government base. We are rapidly coming to the stage that politics takes a back seat to reality. Excepting, of course, house wingnuts who have gone totally insane. It will be decided in the Senate and it’s not a bad thing that at least one repub has at least broached the topic, albeit a past douchebag, that will give dems some political cover for initiating action because they run things. Why would he say such a thing and bring the wrath of the capitalist GOP faithful down on his head? Yes, Graham is an untrustworthy winger, but less so than some others, IMO. He gains nothing from speaking GOP blasphemy, and let’s dems say a repub said it first.
Stuck
This is the fifth or sixth comment swept up into moderation today. What gives?
Reverend Dennis
@Andrea:
I just looked up GM’s market cap in preparation for commenting on this: $1.33Bn ( GM shares closed at $2.18 today. You wanna’ cup of coffee or a share of GM?). GM’s "plan" requires an additional $17Bn. I’d be surprised if the plan didn’t include some fairly optimistic assumptions about when GM will start selling numbers of cars again.
The first bailout had my full support. Paying almost thirteen times what GM is worth seems just plain dumb at this point. I’ve come to favor bankruptcy for GM and a quiet execution for Chrysler. Otherwise, just give ’em the money and let the fact that few can or will buy a new car just drive them out of business within eighteen months anyway.
neal peart
If I’m a BoA shareholder, it would seem appropriate to reward management for swindling the Bush Treasury Dept. so adeptly. That said, TARP is really nothing more than a glorified bank heist (except the bankers are the thiefs) assisted by complicit government officials.
Walker
@kwAwk:
What a rambling post. I do not know why I bothered.
When people talk about "nationalization" in this context, they really mean FDIC receivership, which is a form of structured bankruptcy (the non-nationalization option in your post). However, if you think that Chapter 11 bankruptcy – instead of an orderly FDIC process- is the way to go with a bank (particularly a large bank) you have no idea what you are talking about.
As for punishing the stockholders, that would happen in a Chapter 11 bankruptcy as well. Stockholders are lowest on the totem pole, way below bond holders, and bond holders would be lucky to get anything in a Chapter 11 bankruptcy.
The Populist
The right are the biggest socialists around…let me count the ways:
1) Love of being protected from the big bad brown man with his beard and exotic religion.
2) Love of expanding government to spy on and keep track of enemies, real and perceived.
3) Spreading the wealth of the middle class to the richest Americans (or in Palin’s case, taking the Oil company profits and spreading the wealth to lazy Alaskans!).
4) Having a national religious platform.
5) Giving cronies tons of cash (like military contractors and Halliburton!).
6) This love of wearing the flag on everything.
7) Distrust of the law and judges.
8) Distrust of people who aren’t like them aka Tribalism.
9) The love of hurting small business in favor of big business aka the not-so-free market.
Oops, that’s not socialism but Nazism or some strange hybrid. Wow.
Groucho48
Well, to be fair, even if you bought GM for 3 billion, you’d still need loads of money to keep it afloat and you’d probably have to keep most of the high level executives in place. And they’d still be wanting that 18 billion. Some kind of non-official bankruptcy-equivalent procedure would probably make the most sense.
TheHatOnMyCat
Seems to me that only works if the idea is to buy their assets and process those out in some way. If the idea is to build cars, and preserve jobs, then cash infusion is necessary.
So the government might want to buy the company, but they’d still have to prop it up with cash until sales come back.
So I think Moore is full of it.
And I generally am a Moore fan.
Martin
Um, no.
The banks have failed. Everyone is clear on that point. The problem is HOW they will fail. Lehman failing wasn’t the problem – how they failed was.
Nationalization achieves two things:
1) Account holders know the state of their money. This is key. This is where Lehman blew up. $60B in shareholders vs $6T in account holders is no contest. The former will whine, the latter will wreck the planet.
2) Control. We’ve now learned that tossing cash at these companies doesn’t produces the needed results. These banks have no path to solvency given the state of the economy, yet they use the cash as though there is one. Quite simply, no rational person should trust these guys at this stage.
The Populist
It seems to be all about punishing the stockholders.
Yep, the Republican mantra. Favor boards and CEOs over shareholder’s rights.
If you are naive enough to hold stock in any bank right now, then you deserve to lose. I contemplated buying USB when they were one of the few not showing any signs of problems, then they get TARP funds to buy Downey Savings and PFF and then POOF…they admit to having to write off 1 billion.
Wow.
kwAwk
Actually Walker if you had been reading here and other places the FDIC receivership is not what has been being discussed. The Swedish model is what has been being discussed where the banks are nationalized and owned by the government, which then strips out the bad assets, and recapitalizes the banks and gets them lending again. The government would then spin off the banks by selling them outright to private equity firms or issuing a new IPO for the banks.
Being lowest on the totem pole would be better than simply giving up your stake in its entirety.
The Populist
I need to vent. President Obama and VP Biden were here in Colorado today and a handful of idiots (hundreds! according to local news) gathered to holler PORK! And of course the local media covered it like they represented the majority opinion in the state.
I mentioned this in another thread. It was that attention whore Malkin and friends. Funny, she claims to have such a large readership and 100s is all she could pull?
What ever happened to not protesting? The right seem to hate protests unless they do it. Strange stuff.
The Populist
No, we need people to grab their knickers and face reality. Goddamn this country is full of fucking chickenshit reality deniers and the last thing we need to do is enable that. Why not just say that Jesus is going to take over the banks?
It’s funny. I used to think the young people in this country were too sheltered but maybe there is hope because a lot of them are starting to wake up and realize mommy and daddy lied about Republican ideals.
kwAwk
What people seem to be having a hard time getting their minds around is that the money that will be spent to bail out the banks is going to be spent whether they are nationalized or not.
If Obama doesn’t succeed in getting the private equity funds to buy the tainted assets then the government is going to have to buy them.
Then it only becomes a simple question of who will benefit from the bailout, the existing stockholders or the private equity funds who will buy the banks on the other side at a discount but weren’t willing to take any actual risks for the gain.
passerby
@Stuck:
Yes, sometimes I hit refresh and if that doesn’t work I leave the site and come back to the comment thread via the front page.
Since I’m a dinosaur when it comes to technical difficulties on my computer, I’d re-boot and beyond that, system restore if I can’t get it to straighten out. I always assume my "settings" are fucked up. (shrugs)
Sniff glue if you like but I recommend a bong hit for these situations.
passerby
Three things:
1) It makes no sense to prop up a failed system which will only, in time, revert to another bubble/bust.
2) The notion of trickle down is epic fail.
3) Temporary nationalization, complete with transparent books and strict (and new) regulatory oversight, seems to be the only viable option.
These heartless banks have now taken to raising the interest rates on credit cards as though we weren’t paying high enough rates already. We’ve been working their plantations a long time now. Nationalize them, implement the corrections and re-privatize. There’s a lot going on behind the scenes, some of it now beginning to percolate up to the MSM, that is geared toward this happening.
C’mon Deus Ex Machina Plan!
Phoenician in a time of Romans
It seems to be all about punishing the stockholders.
How much consideration do the stockholders of a failed company deserve?
Answer: none. Look up "limited liability: – they "deserve" to lose up to the total value of their holdings. That’s what capitalism *is*.
Chuck Butcher
The shareholders? What the hell is your share worth? The bank is upside down, it isn’t about some panic run, they own expensive debts not assets for cripes sake (all gang references carefully avoided). For gods sake, it isn’t about some pissant mortgage failures, though that may get really big much more shit happens, it’s about a shit pile of worthless leveraging paper. You’ve got junk paper at 10x the value of the damn mortgages if they were all good, so you’ll do what with those busted mortgages? Sell the $200K house for $2M?
Damn, if you just plain sieze the banks totally you’ll lose a shitpile of money unless you plan to just write "SORRY" across all that junk paper owned by stupid ass banks all over the world. They’re not propping up BofA, they’re propping up banks all over the world…
Same reason you don’t buy GM for $0.02 and sell the pieces and kill 1.5M jobs in a fell swoop.
I don’t know about firing squads, I have some thoughts on sniping though. $2.00 round vs trial…
I’m just kidding…
I think…
Chuck Butcher
Huh? Vista has been messing around with stuff again, I now have this colorful kind of art deco-ish balloon icon in front of Balloon Juice on the tab and in the Favorites. There are times owning MS software is some sort of adventure in the unexpected.
The new icon is a better representation of BJ than the other plain dead sort of thing. Does that sound somehow…software gay?
;-)
OriGuy
Groucho Marx as John Boehner
bago
It’s called favicon.
R K P
If Graham thinks socializing the country is the way to go and that nationalizing the banks is a GOOD THING. Then I think we need to recall him from OUR office. He seems to forget that he works for us and that we are NOT dummies.
If he doesn’t do a 180* I will campaign for his opponent in his next election.
kay
This is great. On Greenspan:
“If he would just shut up and go away, there would be no need to personalize this,” said hedge fund manager William Fleckenstein".
“But he won’t shut up and go away, and he’s trying to play for the history books,” Fleckenstein said. “But he has only one place in the history books, and that is as the author of this chaos that’s nearly vaporized the world’s financial system.”
Stuck
@passerby:
Thanks!
Reverend Dennis
GM and Chrysler and their suppliers are going to lose a lot of jobs until their capacity matches the demand for their cars. Neither bankruptcy nor bailout is going to keep that from happening. The question is, which would be the the more orderly process?
ksmiami
Shouldn’t Paulson and company hang? The more I think about it, the madder I am that the Republicans even have the media covering them. They fucked it all up. No soup for them
liberal
@Tonal Crow:
But given that these huge banks are almost certainly insolvent, you can’t completely protect the bondholders and the taxpayers.
liberal
@Ed Marshall:
Rule #1, regardless of how it’s structured, should be that taxpayers put up NO money. I feel more sorry for the bondholders than the shareholders, but bondholders (like shareholders) also knew they were taking a risk.
liberal
@kwAwk:
LOL! You linked to an idiot who thinks the problem is one of liquidity, when it’s becoming readily apparent that the problem is insolvency.
liberal
@kwAwk:
Dead wrong. The government can force bondholders to buy them by promoting bondholders to equity.