So I'm not nearly well versed enough on the legal and political implications of nationalization as an alternative to the Geithner Plan. My gut tells me that Krugman, Roubini etc. are probably right and that most of the toxic assets are currently valued appropriately (little to nothing). However, nationalization does seem to me to be by far the most radical, no-going-back-from-this solution available. I'd like to back it because I'm completely fine with it philosphically.
I'm pissed off that with the Geithner Plan the bankers and assholes will make a killing on the way up for this crisis and on the way down thanks to public money. However, I have some questions about nationalization that I would like answered by some kind souls here before I can get on board. Some are slightly rhetorical because I think I may know the answers and for those I'm really looking for competing arguments. Others, however are completely earnest.
- How would nationalization work legally? Is this something that the government or the Treasury has the power to do right now? Would it need authorization from Congress? If not, who makes the call and how? If it needs authorization, is a blanket green light or would it be needed for individual entities? Would it be based on a Treasury evaluation, and if so how would that evaluation be made?
- Would the government then own all the assets of the bank and if so how does it compensate for those assets or value them? Who gets that money if it must be paid? Is the government then on the hook for all the liabilities as well? Does it have to pay for those liabilities? What would those liabilities be? Would the toxic assets need compensation to someone or simply be zeroed out? Who would staff the banks managerially? How would we hire these people? At what point does the government sell the banks back, how is the sale done, and who gets to buy? How does the government determine when to sell?
- Going back to the first question, if this must be approved by congress, how is that done and could it actually be done right now?
I am not looking for this to be a diary about how much of an asshole Geithner of Krugman is but constructive question and answers about the implications of Geithner vs. Nationalization. My gut tells me that Krugman et al. are correct and that nationalization may be necessary for some banks, but Geithner would perhaps limit the number of banks needing to be taken over and make nationalization more palatable later to more people. It seems like the thing that must happen to find the bottom is for the these assets to finally, once and for all, be valued so that we can sort the wheat from the chaffe. Basically I'm looking for reasons why nationalization is practical now and the how, what, when, where etc. of it be implemented, practically speaking. I can fully grasp the bad part of the Geithner plan (shitheads getting more public money) so I don't need more of that, please. Any help greatly appreciated. Thanks.