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Kristof's Bank Idea

Nicholas Kristof has an interesting idea:

[A] broad range of experts believe that some variation of nationalization is the only way to revive the banks quickly without squandering vast amounts of taxpayer dollars. Even the managing director of the International Monetary Fund suggested that Washington think of the Swedish model.

America’s horror of “nationalization” could be defused by handing out shares to all American households. President Bush used to talk about building an “ownership society.” Well, giving shares in big banks to all American households would be a terrific way to do that.

For many Americans, it would be the first time they directly owned stock -- and, finally, something good could come from the banking Bust Bowl of 2009.

The Republicans should be all over this idea. It seems clearer and clearer that dramatic action -- more dramatic that than taken to date -- is going to be needed to save the banks. Either:

  • 1. We buy up hundreds of billions -- if not trillions -- of dollars of their toxic assets above their market value.
    • 1a. We then hold on to these assets long enough to try to realize a profit, or
    • 1b. We then sell the assets immediately and take staggering losses on them.
  • 2. We inject sufficient capital into the banks to set them right, which will result in their effective nationalization.
If I were a Republican, I'd hate 1a (I wouldn't want the government owning what should be the private sector) and 1b (I wouldn't want the government to spend so much on this bailout). That leaves option 2, which sounds right in line with the "ownership society".

Have any Republicans talked about this?


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