Bank Nationalization Proponents Suffer First of (Hopefully) Many Setbacks

Remarks by Federal Reserve Board Chairman Ben Bernanke allayed fears of the federal government nationalizing major banks. Appearing before the House Financial Services Committee, Bernanke said the major banks were not in jeopardy of failing and nationalization was not necessary.

Bernanke stated that nationalization is when the government seizes the bank, zeros out the shareholders, and manages the bank. He said the government doesn't have anything like that planned. His remarks caused a significant rally in beaten down bank stocks.

The positive comments by the Fed Chairman came the day after President Obama’s optimistic State of the Union address. Bernanke and Obama's remarks were the first meaningful statements to effectively offset the cries for nationalization that had been increasingly dominating the print and cable media.

The loud voices favoring bank nationalization have suffered their first major setback. Those opposed to nationalization hope this is the first of many defeats that the talking heads will receive going forward. Baseless rhetoric by inexperienced pundits has simply become too much for the nation to bear.

Comments

[pelican:]

Well, it sounds like you are saying those who favor nationalization are loud idiots, while those who don't speak softly and reasonably. Everyone is entitled to their opinion. And I wouldn't jump the gun and assume (some form of) nationalization won't happen. One could make a reasonable case - in a quiet voice even - that Citi already represents a de facto nationalization. Others may follow the AIG model. Even if it isn't a full nationalization, it doesn't seem that much better. It seems like you are treating this debate like a football game. Yet, regardless what happens, I see no clear winners.

Feb 26 03:52 AM