Now why is nationalization a better use of money? Well first, we are much too far down the road to discuss hands off policies (even though I advocated for this long ago because I knew things like TARP and Ben Bernanke’s nutty work were simply money being flushed down the toilet). First, with nationalization we own the banks flat out. We can then do the following:Amen brothers and sisters!! Can I get a big Amen?
-Shareholders get eliminated
-Bondholders get eliminated
-Management gets the boot
-Then and only then, do we separate out the good and bad assets. The good assets we try to sell them off to the market. The bad assets, we assess and slowly process a pricing model and get rid of them. Yet we know since the ownership is now ours that we’ll try to mitigate the loss for taxpayers. Right now with TARP and possibly the bad bank, banks are trying to off load as much of the crap at the highest cost to taxpayers while keeping the caviar assets all for themselves.
-This will get credit moving again because now instead of absurd capital injections, banks will now need to lend money because guess what, we freakin own them and we can decide whether we loan or not!
There is nothing more preposterous than a bad bank...