The issue of nationalizing banks is getting more and more attention. Within the last week, Sen. Lindsey Graham (R-SC), Rep. Peter King (R-NY), Sen. Charles Schumer (D-N.Y.) and former Fed Chairman Alan Greenspan have all suggested that nationalization should be looked at. Obama would be foolish to do so.
First, I agree with those who say that we should not rescue failing banks. There will be casualties in this financial crisis, and failing banks should be among them. We simply cannot continue to bail out companies that bankrupted themselves through unsound business practices, especially when to do so would add to the rapidly growing debt we are piling on our children. Furthermore, as near as I can tell from my research, Nationalization would be a bad idea. The best explanation of why that I have found is from the Motley Fool.
Second, if Obama nationalizes banks it will give the GOP and the RRR (Rabid Right Radio) enough ammo to really make a difference in the next election. Hannity, Beck, Limbaugh, and their servants in the GOP have already labeled Obama a socialist with scant evidence to back it up. Nationalizing banks would be the smoking gun they need and they will pound that topic into the ground.
Third, I don't think main street cares about the banks. Nationalization would be unpopular, and would be seen as just another examples of the Wall Street fat cats getting the money while the regular guys get the shaft.
Nationalization would be a long, costly process and two years from now the only result would be that those banks will not have failed. They won't have recovered by then, and will still be seen as propped up by the government. In the mean time the GOP will have made Obama look like a cross between Hugo Chavez and Eugene Debs. It will hurt the entire Liberal agenda for, I think, very little gain.
Obama has been silent on nationalization so far, so I think he understands the dangers here.
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