Roubini: Nationalization “fully on the table” in Geithner’s Plan
This is yet another semi-positive post about the Geithner plan. To reiterate, I think the plan is inadequate because it assumes illiquidity instead of insolvency and is a huge gift to the financial sector. But, that does not mean it will definitely not work in conjunction with other moves by Obama.
In fact, to the degree the Obama Administration has Plan B up its sleeve, bankruptcy/pre-privatization is still an option here (Remember, they did speak to the Swedes recently about their 1990s resolution).
Nouriel Roubini agrees with this assessment as quoted by the New York Times.
Mr. Roubini believes that the Treasury’s plan does not preclude nationalization at all. Rather, he said, it will help to clear the way to full government takeover of some troubled institutions.
“I see the option of nationalization” and the one presented by the Obama administration “as being complementary,” Mr. Roubini said. He believes that the stress tests the government plans on conducting on the banks will reveal which are solvent and which are insolvent.
In his view, those banks that are deemed insolvent will not participate in the toxic-asset plan and will be taken over by the government. Banks deemed solvent will be the ones that get to participate.
Nationalization “is fully on the table for banks that are insolvent,” Mr. Roubini said.
Do I like the plan? No. I don’t even like the way the stress tests will be conducted. Is the plan fair to ordinary Americans? No.
Will it work? I have my doubts, but it could do. But, then again, there is always Plan B later.
Source
Dr. Doom Finds Promise in Obama’s Toxic-Asset Plan – NY Times
About Edward Harrison
- Nouriel Roubini: Bloomberg Interview on Banking Crisis Plan 1 Oct 2008
- Yves Smith: Nationalization is what the FDIC is doing every week 21 Feb 2009
- Nationalization talk everywhere 23 Feb 2009
- Creeping Nationalization 2 Mar 2009
- The nationalization of America’s mortgage problem 11 Sep 2008