Obama White House seriously considering nationalizing much of banking system
January 26, 2009 at 4:04 pm by Wayne GarciaThis oughta give some shivers to all the free marketeers out there (and honestly, shouldn’t that be everyone?). The New York Times reports:
Only five days into the Obama presidency, members of the new administration and Democratic leaders in Congress are already dancing around one of the most politically delicate questions about the financial bailout: Is the president prepared to nationalize a huge swath of the nation’s banking system?
Speaker Nancy Pelosi has alluded to internal debate over whether large banks should be nationalized, while aides to President Obama have avoided the word and are looking into alternatives. Privately, most members of the Obama economic team concede that the rapid deterioration of the country’s biggest banks, notably Bank of America and Citigroup, is bound to require far larger investments of taxpayer money, atop the more than $300 billion of taxpayer money already poured into those two financial institutions and hundreds of others.
But if hundreds of billions of dollars of new investment is needed to shore up those banks, and perhaps their competitors, what do taxpayers get in return? And how do the risks escalate as government’s role expands from a few bailouts to control over a vast portion of the financial sector of the world’s largest economy?
