How Economists (and Pundits and Politicians) Helped Steer America Off a Cliff
Continued from previous page
And that makes perfect sense, but that's not what they're talking about right now. What they're talking about right now is, you leave the banks operating. You leave Citibank there. You leave Bank of America, Wells Fargo, all the others who have hundreds of billions of dollars of bad assets, perhaps trillions of dollars between them, and we just take their bad assets, pay them more than they're worth, and then we let them keep operating as though nothing had happened.
And that's just a huge handout to the shareholders of these companies, as well as to executives, because they're able to keep their high-paying jobs.
So, people should be aware of that and they should be screaming bloody murder if anyone tries to go through with those plans.
JH: Should we be thinking about nationalizing these banks?
DB: Well, in effect, that's right. I mean, and again, understand what's going on. They would be going into bankruptcy. This isn't a communist takeover. They would be in bankruptcy. That would be the market outcome. But we don't want the market outcome, because these [institutions] are too big to fail. We don't want Citigroup going into bankruptcy and having a judge have to sort through, you know, trillions of dollars of loans and assets. I mean, it would just be a nightmare.
Now, at least to my mind, I really don't want the government to own the banks. But they put themselves in that situation, where they're effectively bankrupt. So, for a period of time, yeah. I think we do have to nationalize them until we could get them reorganized and sold off again to the private sector.