A bit of wishful thinking on my part, but I think that Obama may have a secret plan. Let's just say that we as a people had a "culture" that allowed us to nationalize banks. If we were going to do it, how could the government announce this as its plan without destroying the remaining stock value of most, if not all, financial institutions, including those that should survive and are not being nationalized? Answer - it cannot do so. Accordingly, we need to devise a way to stealthy go into the banks, review their books carefully to determine those to take down and then - all at once - announce those being nationalized and those being supported as private institutions. Now the Geithner announced plan includes a "stress test" for banks over $100 billion, i.e. the top 14, so it will allow the government to do this review for the big boys, and for the rest we need not bother - the FDIC will take care of them in due course.
http://krugman.blogs.nytimes.com/2009/02/11/obama-on-nationalization/
Doing the nationalization all at once should hopefully avoid stigmitizing the remaining viable institutions (if done properly it could give them a boost) and should allow us to put this chapter behind us and get on with or out of this recession/depression. Anyway, I can have a dream.
Meanwhile, either Obama is not the President I hoped he would be or he is just keeping his true plans under wraps and plans on giving us a big surprise. It could happen, but I doubt it. He could not properly do this without Congressional support and there is no way Congress could keep a secret. At the end of the day, that may be a major problem with nationalization; it cannot be structured in a fashion that it can all be done at once and doing so any other way just leads to more doubts and problems.
Disclosures: None
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