What we’re talking about is very much a private sector, perhaps the ultimate market based response to the problem. The choice is between keeping a series of de facto insolvent banks on long-term life support, subsidizing them with vast amounts of tax payer money and involving the government in various aspects of their management or biting the bullet, take them over for a while and reprivatize them as totally private banks. Like I said, it’s really no different from what the FDIC does to a couple banks every week this year.
But when that receivership may last up to five years, and involves many huge banks, it’s a little more daunting. Don’t get me wrong: it seems increasingly like the least worst option to me. But I don’t begrudge the administration a little caution before jumping in.
The Dish 