Rep.
Maxine Waters was lambasted as a left-wing radical last year when she
raised the idea of nationalizing the oil industry. But on a Sunday
morning talk show, a Republican senator came off even more supportive
than her of nationalizing banks.
“I would not take off the idea
of nationalizing the banks,” Sen. Lindsey Graham (R-S.C.), said on
ABC’s “This Week with George Stephanopoulos.”
{mosads}Graham, a
confidant of former Republican presidential nominee Sen. John McCain (Ariz.),
said that the problems in the economy and the financial sector are so
severe that U.S. policy makers may have to start thinking about things
once labeled unthinkable.
“This idea of nationalizing banks is
not comfortable,” said Graham, appearing downcast. “But I think we have
gotten so many toxic assets spread throughout the banking and financial
community throughout the world that we’re going to have to do something
that no one ever envisioned a year ago, no one likes.”
Graham’s
remarks come months after then President Bush and his treasury
secretary, Henry Paulson, bailed out major companies in the financial
sector and successfully persuaded Congress to pass a $700 financial
rescue package that triggered concerns about nationalizing banks.
Waters
(D-Calif.), who was ripped on blogs as a “communist” and “tin-pot
collectivist,” after suggesting a government takeover of the oil
industry at a hearing on gasoline prices, was more reluctant.
“The
word ‘nationalization’ scares the hell out of people,” Waters said.
“Citibank is probably almost nationalized with the amount of money that
we’ve put in it. But I don’t think that we are ready to move to the
point of a formalized nationalized banking program yet.”
It was
left to Sen. Charles Schumer (D-N.Y.), whose state includes the capital
of the financial sector, to dismiss the idea of nationalizing banks.
“I
would not be for nationalizing,” Schumer said. “I think government’s
not good at making these decisions as to who gets loans and how this
happens.”
The prospect, though, was raised by two New Yorkers
who are free-market economists. Matthew Richardson and Nouriel Roubini,
professors at New York University’s Stern School of Business, penned an
op-ed in Sunday’s Washington Post entitled “Nationalize the banks!
We’re all Swedes Now.”
“We feel downright blasphemous proposing
an all-out government takeover of the banking system,” they wrote. “But
the U.S. financial system has reached such a dangerous tipping point
that little choice remains.”
Many other economists have also
suggested nationalizing banks. So much so that as he rolled out his
broad strategy for dealing with the troubled financial sector last
week, Treasury Secretary Timothy Geithner found himself discouraging
speculation that the federal government might nationalize banks.
“We
have a financial system that is run by private shareholders, managed by
private institutions, and we’d like to do our best to preserve that
system,” Geithner said.
Waters raised the prospect of taking
over oil companies as she scolded oil executives at a May 2008
congressional hearing as gasoline prices headed for $4 a gallon.
“Guess
what this liberal would be all about. This liberal will be about
socializing,” she said, pausing, “would be about, basically, taking
over, and the government running all of your companies.”