Yesterday, after Tim Geithner’s lackluster speech, President Obama told ABC that ‘nationalization’ of the banks “wouldn’t make sense.” He specifically referenced the Swedish model. And he offered two basic reasons: 1) We’ve got thousands of banks whereas the Swedes had only a handful. And 2) We have different political ‘traditions’ that don’t make it credible in this country, which I take to mean that anti-statism is too deep in the American political fabric for it to be workable.
The second point speaks for itself whether you agree with it or not. But it’s the first that caught my attention. It’s true that we have many more banks than the Swedes had. In addition to the couple dozen well known national banks (perhaps fewer actually), there are thousands of small to medium sized banks spread around the country.
As Obama put it, “Here’s the problem — Sweden had like five banks. We’ve got thousands of banks. You know, the scale of the U.S. economy and the capital markets are so vast and the, the problems in terms of managing and overseeing anything of that scale, I think, would — our assessment was that it wouldn’t make sense.”
What doesn’t compute to me about this is that I do not think anyone is talking about a wholesale nationalization of the banking sector — as in you literally nationalize the whole banking industry. The problem seems to be centered in a very small number of very big mega-banks. And what people are talking about is applying some version of Geithner’s bank ‘stress test’, coming clean about which banks are insolvent and having those banks that don’t pass the test taken over, just as little banks go under every week nowadays. (For a more detailed discussion of how this would all work, see our recent interview with economist Joe Stiglitz.)
Late Update: Simon Johnson makes another troubling point. The folks at the Treasury just don’t have a lot of experience dealing with all out financial crises. And the folks who do don’t seem to think we’re going down the right path.
A little nugget beneath the fanfare. Few people had more power in the Stimulus Bill negotiations than Sen. Susan Collins (R-ME). And she apparently used a lot of that juice on Wednesday to get a key whistleblower protection provision stripped from the bill. That’s a key provision to help prevent waste and fraud. And, remember, Collins is the ranking member of the main senate investigations and oversight committee.
Obama comments at Ford’s Theater rededication …
Michelle and I are so pleased to be here to renew and rededicate this hallowed space. We know that Ford’s Theatre will remain a place where Lincoln’s legacy thrives, where his love of the humanities and belief in the power of education have a home, and where his generosity of spirit are reflected in all the work that takes place.
It has been a fitting tribute to Abraham Lincoln that we’ve seen and heard from some of our most celebrated icons of stage and screen. Because Lincoln himself was a great admirer of the arts. It is said he could even quote portions of Hamlet and Macbeth by heart. And so, I somehow think this event captured an essential part of the man whose life we celebrate tonight.
As commemorations take place across this country on the bicentennial of our 16th President’s birth, there will be reflections on all he was and all he did for this nation that he saved. But while there are any number of moments that reveal the exceptional nature of this singular figure, there is one in particular I’d like to share with you.
Not far from here stands our nation’s capitol, a landmark familiar to us all but one that looked very different in Lincoln’s time. For it remained unfinished until the end of the war. The laborers who built the dome came to work wondering whether each day would be their last; whether the metal they were using for its frame would be requisitioned for the war and melted down into bullets. But each day went by without any orders to halt construction – so they kept on working and kept on building.
When President Lincoln was finally told of all the metal being used there, his response was short and clear: that is as it should be. The American people needed to be reminded, he believed, that even in a time of war, the work would go on; that even when the nation itself was in doubt, its future was being secured; and that on that distant day, when the guns fell silent, a national capitol would stand, with a statue of freedom at its peak, as a symbol of unity in a land still mending its divisions.
It is this sense of unity that is so much a part of Lincoln’s legacy. For despite all that divided us – north and south, black and white – he had an unyielding belief that we were, at heart, one nation, and one people. And because of Abraham Lincoln, and all who’ve carried on his work in the generations since, that is what we remain today. Thank you, and good night.
Sen. Susan Collins (R-ME), ranking member of the Senate’s oversight committee, no less, kills a whistleblower protection provision in the stimulus bill.