My friend and former colleague covering the Clinton White House, David Sanger, has banks.html?hp”>a somewhat breathless piece in today’s New York Times about banks and nationalization. As I suggested last week, I don’t think nationalization is the best way to describe what’s likely to happen.
I hasten to add that anyone who guesses what’s going to happen with this economy and the government’s response to it, is fooling themselves and this includes me. Like most observers I knew Fannie and Freddie were in trouble but, this time last year, even though I‘d been a longtime Fannie critic, I didn’t see them going into government conservatorship. But nevertheless I think “utilityization” is a better way of thinking about banks. They’re likely to stay in private hands and even be publicly traded but they’ll be out of the risky businesses–mortgage-backed securities, Alt A loans, etc–that brought us to this point and will become much more regulated just like providers of water and gas.
I hope, as we move forward, with repairing the finance industry that we come up with less loaded terms than nationalization. We’re not Cuba and we’re not going to be. There’s going to be an American solution to this problem. We just need a label for it.
