Alan Greenspan wants limited bank nationalization?
The former Fed chairman said temporary government ownership would "allow the government to transfer toxic assets to a bad bank without the problem of how to price them."
But he cautioned that holders of senior debt – bonds that would be paid off before other claims – might have to be protected even in the event of nationalisation.
"You would have to be very careful about imposing any loss on senior creditors of any bank taken under government control because it could impact the senior debt of all other banks," he said. "This is a credit crisis and it is essential to preserve an anchor for the financing of the system. That anchor is the senior debt."
Gr
First, Greenspan, who by now as a consequence of helping to destroy this country should have zero credibility, wants the taxpayers to pay for his and his friends' gambling losses by eating their toxic assets.
Uh, no thanks.
In addition, he wants to "protect senior debt." I'll let b over at moonofalabama.org explain what that means:
Ahh - there is the rat I smelled when I read that headline. Greenspan is advising the bond giant PIMCO which is a major holder of bank debt. So according to him:
* The owners of banks that recklessly lend to people who had little ability to pay back shall now get punished.
* The taxpayer shall get a "bad bank" with lots of unknown risks and possibly very high future costs attached.
* The people that recklessly lend to banks who had little ability to pay back shall NOT be punished.
And why? Because Greenspan gets paid by the last group.
No way. Restructure the banks and let those who gave them the money to play in the casino take the losses.
There is no reason that the folks who did not further gaming should pay any a dime for this scheme.
Some people are unrepentant rat finks. I'd rather nationalize Greenspan so we could all beat him like a rented mule, but here's a much better idea from Ilargi over at TAE:
Let the banks fail. Let mortgages fail so housing can find its true bottom, rather than wasting money on failed attempts to re-float the bubble and continue propping up banks that are going to fail anyway. Instead, use bailout money to fund new healthy banks.
Nationalize properties and give them to their respective local communities. Let former mortgage owners continue to live in them by paying rent directly to the local communities that badly need funding.