housam Jarrar

Bank Nationalization: It's Just Plain Wrong

I am puzzled by your rationalization simply because you are basing your opinion on assumptions of what would have happened if the government extended guarentee's ,liquidity and deposit insurance to banks in the RTC era.However,you are completely ignoring the fact that all you suggest was in-fact implemented by japan in the 90's to no avail.The thought that continuing injection of capitol into banks will eventually work itself out did not happen.The fact of the matter is that no one knows what these institutions have on their balance and off balance sheets which is a ticking time bomb and so what the banks are facing is not a bank run due to liquidity but a run due to insolvency.What you propose is allowing the people who made the mess to correct it and I do not see ay reason to give them the benefit of the doubt.nationalization is going to be painful but at least we will know just how deep the hole is and maybe with a little luck restore the ever distant trust into our banks which is clearly and forever changed.

Solving the Bank Crisis: More TARPs Are Not the Answer

I agree with everything you said.However,I was not sure about your point regarding paying the shareholders for their shares.The banks made risky bets and shareholders reaped the benefits for many years,therefore they should be entitled to no more than 0$.