NYT’s DealBook is reporting that analysts at RBC Capital Markets are proposing what looks a lot like a quasi-nationalization proposal.
‘Nationalization’ is a loaded word. But the key is making insolvent banks face their insolvency, from which a number of steps inevitably follow …
The analysts, including Jon Arfstrom, Jason Arnold, Gerard Cassidy and Joe Morford, suggest that the solution to the bank meltdown is a tough love approach: The government should seize insolvent banks — “of any size,” they write — and pool the worst assets in an investment vehicle akin to the Resolution Trust Corporation, which was formed to mop up the flotsam from the savings and loan debacle.
Why such a harsh prescription?
These analysts think that American banks are still carrying far too many assets at inflated prices, and marking them down to more-realistic values would “overwhelm the capital of the U.S. banking system,” they say.
