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Nationalize Some Banks: Greenspan

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

By Jason Farago, Newser Staff

Posted Feb 18, 2009 8:06 AM CST

(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."

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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. (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. (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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Nationalize Some Banks: Greenspan