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MONDAY, NOVEMBER 23, 2009
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9

Nationalize Some Banks: Greenspan

Ex-Fed head abandons free-market purism, wants temporary move

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(Newser) – Alan Greenspan, once famed for his light touch, now says the US may have to temporarily nationalize some banks. The former Fed chairman said in an interview with the Financial Times that some institutions need government ownership to restore liquidity and help shore up the larger financial system. "In some cases, the least bad solution is for the government to take temporary control," he said.

"I understand that once in a hundred years this is what you do," said Greenspan, whose laissez-faire approach to regulation has drawn withering criticism as the crisis has unfolded. Sen. Lindsay Graham has also changed his tune: The South Carolina senator said "focusing on what works" should trump ideology, adding, "We cannot keep pouring good money after bad. If nationalization is what works, then we should do it."

Alan Greenspan, former chairman of the Federal Reserve speaks at the Economic Club of New York meeting on Tuesday, Feb. 17, 2009 in New York.
Alan Greenspan, former chairman of the Federal Reserve speaks at the Economic Club of New York meeting on Tuesday, Feb. 17, 2009 in New York.   (AP Photo/Jin Lee)
Alan Greenspan, right, former chairman of the Federal Reserve, speaks at the Economic Club of New York meeting on Tuesday, Feb. 17, 2009 in New York.
Alan Greenspan, right, former chairman of the Federal Reserve, speaks at the Economic Club of New York meeting on Tuesday, Feb. 17, 2009 in New York.   (AP Photo/Jin Lee)
Barack Obama and Lindsey Graham, senator from South Carolina. Graham is one of many politicians from across the political spectrum to support the nationalization of banks.
Barack Obama and Lindsey Graham, senator from South Carolina. Graham is one of many politicians from across the political spectrum to support the nationalization of banks.   (AP Photo/Gerald Herbert)
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It may be necessary to temporarily nationalize some banks in order to facilitate a swift and orderly restructuring. I understand that once in a hundred years this is what you do. - Alan Greenspan, former
Federal Reserve chairman

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9 comments
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Doctor_Zaius
Feb 18, 09 9:29 AM CST
Looks like you will have to give back your Ayn Rand award. Reply
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Forderon
Feb 18, 09 9:44 AM CST
SOCIALISTS!! This is what those crazy Canadians would do and look at their banking system....wait, nevermind. Seriously though, this is just even more proof that a moderate mix of Keynesian and laissez-faire economics is always better than some extreme. But of course we'll just go back to another extreme once we get out of this and we'll end up right back where we are. We never learn from our history do we? Reply
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IN RESPONSE:
woody66
Feb 18, 09 11:26 AM CST
Bank Quiz 101..... Q: How many Canadian banks have gone bankrupt as result of this financial crisis ? A: None.
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woody66
Feb 18, 09 9:55 AM CST
Well, well ! Practical thinking trumping ideology for a change. Kudos to Greenspan and Linsay Graham. If it has to be done for a period time to undo the gordian banking knot then it has to be done. Then put the banks back in the private sector without the casino aspect to them (which was authorized under the Clinton Adninistration by the way via the Financial Services Modernization Act of 1999). The economy cannot recover on a credit starved diet, stimulus or no stimulus. If the GOP really want to help improve the situation for small business, let them roll up their sleeves and work with DEMS on this one. Reply
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John
Feb 18, 09 11:18 AM CST
Well, well, well, religion at last. We all should never forget that you cannot trust big business to do the right thing!!! Reply
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