Ecuador: PERENCO CONFLICTUADA

VER
http://www.cnnexpansion.com/actualidad/2009/07/16/ecuador-toma-control-de-francesa-perenco

VENEZUELA: NACIONALIZACION DEL BANCO SANTANDER

Chávez afianza sus nacionalizaciones con la compra del Santander

14:13 | Pagarán 1.050 millones de dólares por la filial venezolana del banco español. En las últimas dos semanas otras 76 empresas han sido expropiadas

Caracas (EFE). El Gobierno venezolano selló hoy un acuerdo para adquirir por 1.050 millones de dólares la filial del español Banco Santander en Venezuela y afianzó así el plan nacionalizador que el presidente Hugo Chávez desarrolla desde 2006.

El ministro venezolano de Finanzas, Alí Rodríguez, y el presidente del Banco de Venezuela, Michael Goguikian, suscribieron el convenio para la compraventa de las acciones de la entidad financiera en poder del Santander, que suman el 98,42% del total, después de casi 10 meses de negociaciones calificadas de “cordiales” por ambas partes.

El acuerdo estipula que el próximo 3 de julio, cuando se firmará el contrato de compraventa, el gobierno desembolsará “630 millones de dólares” y emitirá dos pagarés por “210 millones de dólares” cada uno, con vencimientos el 3 de octubre y 30 de diciembre próximos, respectivamente.

Incluye además la autorización para otorgar al Santander divisas por un total de 304,7 millones de dólares para permitirle “repatriar dividendos” del Banco de Venezuela, que al cierre de 2008 registró un beneficio de 317 millones de euros (443,8 millones de dólares), el 3,6% del beneficio total del Grupo Santander, según datos del grupo financiero.

“Creo que hemos alcanzado un acuerdo muy satisfactorio tanto para la Venezuela como para el Banco de Santander”, dijo el presidente del Banco de Venezuela, en una breve declaración tras la firma.

La nacionalización del Banco de Venezuela, anunciada por Chávez el 31 de julio de 2008, se suscribe en la estrategia que busca “fortalecer” la economía socialista, que contempla “áreas bien específicas a impulsar como son la agricultura, la vivienda y la energía”, añadió el vicepresidente.

El Banco de Venezuela es la primera institución financiera alcanzada por el vigoroso proceso nacionalizador que Chávez impulsa desde 2006 y que ha involucrado a los sectores petrolero, eléctrico, telefónica, cemento, siderúrgico y cerámica.

MÁS NACIONALIZACIONES
Ayer, jueves, el mandatario socialista anunció la nacionalización de cinco empresas siderúrgicas de capitales japoneses, mexicanos, europeos y australianos, que operan en la sureña región de Guayana, y de fábrica de cerámicas.

En las últimas dos semanas, Chávez expropió 76 empresas de servicios petroleros, casi todas de capitales locales.

Fwd: Macroperu Greenspan y la nacionalización

Stress testing "nationalization"

Wed Feb 18, 4:51 pm ET

A touchy word has entered the public debate about the future of America's economy. It's a word that would shock the nation in normal times, but as even Republicans begin to whisper it, temporary "nationalization" of troubled banks is increasingly seen as our last best hope for fixing our financial system.

Simply put: Nationalizing ailing banks means the government would tell bank execs to take a hike, and then oversee taxpayer dollars as they course through the banking sector's veins. When all is well, perhaps after selling assets and operations to new private investors, the government then steps back and lets a newly regulated bank sector float on its way.

Arguments for bold government action range from the passionate (Michael Hirsh of Newsweek) to the elegant (Nicholas Kristof of the New York Times). In any case, the number of economists and columnists calling for an aggressive takeover of our "zombie banks" is growing.

This week, respected economists Nouriel Roubini and Matthew Richardson laid it all out in a Washington Post op-ed:

"The U.S. banking system is close to being insolvent, and unless we want to become like Japan in the 1990s -- or the United States in the 1930s -- the only way to save it is to nationalize it….Nationalization is the only option that would permit us to solve the problem of toxic assets in an orderly fashion and finally allow lending to resume. Of course, the economy would still stink, but the death spiral we are in would end.

One could ignore this pessimistic view if Roubini hadn't been consistently correct in his predictions for our worsening economy. Roubini, or "Dr. Doom," as some have called him, is one of the few who saw the housing meltdown coming and who actually voiced his concerns years before it happened.

In a recent interview with Bill Moyers, Simon Johnson, a former chief economist of the International Monetary Fund, argues that many of the executives and members of the banking lobby need to be fired or flushed out, though he stops just short of explicitly calling it nationalization.

Another former IMF economist, however, does not. Ken Rogoff, a Harvard professor who was at the IMF with Treasury Secretary Tim Geithner, thinks government receivership of insolvent banks is becoming our only option. In a roundtable discussion on "PBS NewsHour," Rogoff predicted Geithner and his aides will come to the same conclusion once they "stress test" more Wall Street balance sheets.

Nobel-winning economist and New York Times columnist Paul Krugman was one of the first to note that Geithner's new financial rescue plan does not rule out nationalization. Krugman points to Geithner's "stress tests" as a possible first step in the temporary government takeover of crumbling banks:

"Will those public-private partnerships end up being a covert way to bail out bankers at taxpayers' expense? Or will the required "stress test" act as a back-door route to temporary bank nationalization (the solution favored by a growing number of economists, myself included)? Nobody knows."

Krugman notes in a following column just how quickly the idea of nationalization is picking up steam, even among conservatives:

"There's hope that the bank rescue will eventually turn into something stronger. It has been interesting to watch the idea of temporary bank nationalization move from the fringe to mainstream acceptance, with even Republicans like Senator Lindsey Graham conceding that it may be necessary."

On "This Week" on ABC, Graham argued for nationalization, while Democratic Sen. Chuck Schumer glowingly endorsed Geithner's seemingly less-than-aggressive rescue plan.

Meawhile, on NBC's "Meet the Press," senior White House adviser David Axelrod was asked if nationalization was off the table. Axelrod said it was not, indicating the Obama administration will do whatever it takes to right the nation's financial ship.

However, President Obama has publicly indicated he is against nationalization, for now. When asked about Sweden and how it temporarily nationalized its banks in the early 1990s, saving its economy from an extended slump, Obama noted that Sweden is a different kettle of fish, a rather smaller and socialist one to be exact.

When ABC's George Stephanopoulos asked Rep. Maxine Waters (D-Calif.) about nationalization on "This Week," she said she wasn't quite ready to take that route herself. But she also pointed to the national semantics surrounding the question as the first key hurdle to clear:

"Well, George, as you know, the word "nationalization" scares the hell out of people. And so the debate has been opened up now, and that's good. Let's talk about it."

- Thomas Kelley

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GREENSPAN: nacionalisation banque

Greenspan backs bank nationalisation

By Krishna Guha and Edward Luce in Washington

Published: February 18 2009 00:06 | Last updated: February 18 2009 00:06

The US government may have to nationalise some banks on a temporary
basis to fix the financial system and restore the flow of credit, Alan
Greenspan, the former Federal Reserve chairman, has told the Financial
Times.

In an interview, Mr Greenspan, who for decades was regarded as the high
priest of laisser-faire capitalism, said nationalisation could be the
least bad option left for policymakers.

JAPON: -12.7% DERNIER TRIM

"Le Japon ne pourra pas s'en sortir tout seul"

Par Julie de la Brosse, publié le 16/02/2009 18:48 - mis à jour le 16/02/2009 19:46

REUTERS

Dans une rue de Tokyo, le 12 février, un tableau électronique montre les mouvements de la Bourse.

Le PIB du Japon a chuté de 12,7% au dernier trimestre 2008. Pourquoi la deuxième économie mondiale est elle entrée aussi rapidement dans la crise? Les explications de Danielle Schweisguth, économiste à l'OFCE.

Le PIB de l'économie japonaise a chuté de 12,7% au dernier trimestre 2008. Comment expliquer ce recul ?

Ces chiffres sont catastrophiques. La Japon vit sa plus grave crise depuis l'après guerre. En cause, l'effondrement des exportations qui ont chuté de 14% au quatrième trimestre. La baisse de la demande mondiale a conduit à une perte de compétitivité des entreprises japonaises. En l'espace d'un an et demi, la monnaie nippone s'est appréciée d'environ 40%. Avec un taux de change si désavantageux, les Toyota sont aujourd'hui invendables quand les écrans plats sont largement concurrencés par les prix coréens. Pour la première fois depuis des années, le Japon est en déficit commercial.

Par ailleurs, l'investissement a aussi considérablement chuté. Les anticipations des entreprises sur la baisse des ventes n'arrange pas la situation économique du pays. Finalement, la Japon a été touché plus tôt que les autres pays par la crise de l'économie réelle.

Pourquoi le taux de change est-il si défavorable ?

Depuis la crise des années 90, les taux d'intérêts au Japon ont toujours été très bas. Partout ailleurs, ils étaient élevés. Les investisseurs empruntaient donc en yen pour placer leur argent ailleurs, ce qui leur permettaient d'obtenir des rendements très intéressants. Mais quand les taux d'intérêts ont baissé à la suite de la crise de l'été 2007, le Japon a assisté à un retour des capitaux. Ce qui a inévitablement poussé la monnaie à la hausse.

Il suffirait alors de dévaluer le yen...

Une des solutions serait en effet de dévaluer la monnaie. Seulement se greffent ici des questions d'ordre diplomatiques. En temps de crise, les économies mondiales tentent d'agir de concert. Si le Japon choisit aujourd'hui de dévaluer le yen, il court le risque de se mettre les grandes économies mondiales sur le dos. Et de perdre sa crédibilité face aux différentes banques centrales. Le problème c'est qu'actuellement, personne n'a intérêt, sauf le Japon, à ce que le yen soit déprécié.

Les plans de relance annoncés depuis août 2008 sont-ils suffisants ?

Actuellement, trois de plans de relance ont été adoptés, d'une valeur totale d'environ 600 milliards d'euros. Mais seulement 80 milliards ont été affecté à la relance du marché intérieur. Pour le reste il s'agit avant tout de garantir des prêts. Ces 80 milliards correspondent à l'addition de mesures dérisoires, comme le soutien à l'investissement des entreprises, la distribution de chèques aux ménages, la baisse des cotisations chômage... En moyenne, elles équivalent seulement à 2% du PIB. Pour avoir l'effet multiplicateur désiré, il faudrait un plan de relance équivalent à 5% du PIB, à l'image de ce qui a pu se décider aux Etats-Unis ou en Chine.

Pourquoi cette frilosité dans l'adoption des plans de relance ?

Le Japon est dans une situation très délicate. Sa dette publique atteint 180% du PIB. A titre d'exemple la dette publique française s'élève à seulement 65% du PIB. La marge de manoeuvre reste donc importante chez nous. Au Japon au contraire, la question de la soutenabilité de la dette est devenue centrale. Dans les années 1990, le pays a lancé d'importants plans de relance qui n'ont pas eu les effets escomptés. Depuis, les Japonais craignent la relance budgétaire car ils en payent encore les conséquences. Or la situation internationale est tellement dégradée que la pari de la relance à perte est très risqué. Surtout lorsqu'en interne on se déchire sur la politique à mener.

Pourquoi l'adoption des plans de relance est-elle si difficile au Japon ?

Le gouvernement en place ne contrôle qu'une seule des deux chambres du Parlement. L'entrée en vigueur des mesures est donc retardée par ces dissensions en interne. L'opposition est en faveur des plans de relance quand la majorité craint la mise en place de mesures massives. Et pour cause, depuis 2000, elle s'efforce de stabiliser le niveau de la dette publique, et souhaiterait davantage augmenter la TVA...

Quelles sont les solutions pour la deuxième économie mondiale ?

Le Japon ne pourra pas s'en sortir tout seul. Avec la meilleure volonté du monde, l'économie est trop basée sur le commerce extérieur pour qu'un plan de relance parvienne seul à sauver l'économie du pays. Sa seule chance serait que l'anticipation sur les taux de change se stabilise à la baisse. Et que l'économie mondiale se porte mieux afin que le Japon puisse à nouveau tirer parti de sa spécialisation dans les nouvelles technologie

Obama Should Nationalize U.S. Banks, Krugman Says (Update1)

 

By Brian Swint

Feb. 2 (Bloomberg) -- President Barack Obama shouldn’t hesitate to nationalize the banks that need to be bailed out, Nobel Prize-winning economist Paul Krugman said.

“If taxpayers are footing the bill for rescuing the banks, why shouldn’t they get ownership, at least until private buyers can be found?” Krugman wrote in a column in the New York Times published today. “But the Obama administration appears to be tying itself in knots to avoid this outcome.”

His remarks echo those of Nassim Nicholas Taleb and Nouriel Roubini, who said last week that nationalizations will be necessary to bring the U.S. banking system out of insolvency. Obama will require banks to bolster lending in return for government aid, lawmaker Barney Frank said yesterday, stopping short of taking full ownership.

Krugman said the U.S. government’s rescue plan appears to put banking risk with taxpayers when loans go bad while giving the rewards to executives and shareholders when things go well. He cited newspaper reports that Obama’s rescue plan will include government purchases of troubled bank assets and guarantees against losses.

Treasury Secretary Timothy Geithner said on Jan. 28 that U.S. officials will “do our best” to preserve the banking system run by private shareholders.

Global economic growth will come close to a halt this year as more than $2 trillion of bad assets in the U.S. help sink economies from there to the U.K. and Japan, the International Monetary Fund said last week.

The world’s largest economy may shrink at a 5.5 percent annual pace this quarter after contracting at a 3.8 percent rate in the fourth quarter, according to a forecast by economists at Morgan Stanley in New York.

The government’s $819 billion economic stimulus package is still “very much the right thing to do,” Krugman said.

To contact the reporter on this story: Brian Swint in London atbswint@bloomberg.net

BANQUES:NATIONALISATION N´EST PAS INELUCTABLE

La nationalisation des banques n'est pas inéluctable

[ 02/02/09  ] 4 commentaires

Virer sur l'aile pour rebrousser chemin et atterrir sans se « crasher ». C'est bien l'exploit du pilote d'US Airways que les gouvernements occidentaux doivent rééditer avec des banques aux moteurs coupés. A une exception près : il faut immédiatement faire redécoller l'appareil et le crédit avec. Or, après plus de 800 milliards d'euros de dépréciations financières depuis le début de la crise financière à l'été 2007, la principale passagère de l'engin, l'économie mondiale, se demande toujours si elle arrivera vivante au bout du voyage.

Les plans de sauvetage (1.800 milliards d'euros en Europe et 2.100 milliards de dollars aux Etats-Unis) et l'injection effective de plus de 700 milliards d'euros de capitaux à ce jour par les Etats et les investisseurs privés sont tout juste parvenus à éloigner momentanément le spectre d'un effondrement du système financier. Si bien que, de Jacques Attali à George Soros, des voix de plus en plus nombreuses s'élèvent pour que les Etats passent à la suite logique : la nationalisation des banques.

Ses partisans tirent leur argumentaire de l'évidence même : sous perfusion permanente des banques centrales et des Etats qui remettent sans arrêt des fonds ou garantissent les pertes à venir, les banques ne sont plus que des façades. « Elles cherchent avant tout à limiter les prêts afin de se désendetter. Leur intérêt objectif va contre celui de la collectivité qui est de faire redémarrer le crédit dans les secteurs qui en ont le plus besoin », estime l'économiste Elie Cohen qui plaide en faveur d'une « entrée de l'Etat au capital des banques qui font appel à de l'argent public, voire leur nationalisation, y compris en France » (1). Car le diagnostic ne vaut pas que pour les banques américaines, anglaises ou allemandes.

Nationalisation ou dépression, tel n'est pourtant pas le choix qui s'offre aux gouvernements. Remettre les clefs des banques aux Etats ne résoudra pas en effet les deux questions centrales de la crise demeurées sans réponse.

La première concerne la vérité des prix des actifs toxiques encore logés dans les bilans. La création d'une « bad bank » qui les rachéterait favoriserait la transparence. « Impossible », répondent dirigeants et politiques. Reprendre ces portefeuilles douteux à leur « juste prix » finirait de mettre les banques à terre, assurent les premiers. Les céder à des prix plus élevés reviendrait à « nationaliser les pertes et privatiser les profits », craignent les seconds.

La nationalisation permettrait de sortir de cette quadrature du cercle, estiment ses promoteurs en s'appuyant sur le succès relatif de la Suède. En prenant le contrôle de ses principales banques au début des années 1990, Stockholm a pu récupérer 58 % du coût du sauvetage. C'est toutefois oublier que l'expérience a été de courte durée (quatre ans au lieu des quinze prévus) grâce à une reprise économique mondiale aujourd'hui improbable. L'histoire regorge en revanche d'échecs de la gestion publique d'institutions financières, des banques régionales en Allemagne qui sont tombées dans le piège du « subprime » au scandale du Crédit Lyonnais en France. « Mettre le pouvoir de décision et celui de régulation entre les mêmes mains accroît le risque systémique », observe Noël Amenc, professeur de finance à l'Edhec.

Cet écueil, souligne-t-il, est d'autant plus évitable que les Etats disposent des outils (actions préférentielles notamment) pour recapitaliser les banques sans en prendre le pouvoir. Ils peuvent aussi garder la possibilité de profiter d'un retour à meilleure fortune, à travers des bons de conversion ultérieurement cessibles à des investisseurs privés désireux de participer à la restructuration du secteur.

Cette voie n'est toutefois praticable qu'à condition de clarifier la deuxième interrogation : de quels capitaux les banques ont-elles besoin ? Effrayée par les pertes encore à éponger, la Bourse réclame qu'elles portent leur minimum de fonds propres « durs » (« Tier-1 ») à hauteur de 8 % à 9 % des encours, quand la réglementation le fixe à 4 %. « Cette exigence est contre-productive. Les coussins au-delà du minimum de 4 % sont faits pour gonfler en période de prospérité, et diminuer dans les crises », estime Noël Amenc. Lui suggère d'abaisser à 3 % le ratio réglementaire afin de créer un « choc psychologique » sur les marchés (2). La mesure aurait évité aux Etats d'injecter 250 milliards de dollars dans les banques depuis octobre dernier. Ce n'est certainement pas la seule que les gouvernements devront prendre pour remettre d'aplomb le système bancaire.

Laurent Flallo est éditorialiste aux « Echos ».

NACIONALIZACION BANCA:USA

NEWS ANALYSIS

Nationalization Gets a New, Serious Look

By DAVID E. SANGER

Published: January 25, 2009

WASHINGTON — Only five days into the Obama presidency, members of the new administration and Democratic leaders in Congress are already dancing around one of the most politically delicate questions about the financial bailout: Is the president prepared to nationalize a huge swath of the nation’s banking system?Right now, many banks are reluctant to write off their bad debts, and absorb huge losses, unless they can first raise enough capital to cushion the blow. But they cannot attract that capital without first purging their balance sheets of the toxic assets. Japan’s experience proved the dangers of that downward swirl; the economy stagnated, new lending ground to a halt and the country’s diplomatic clout shrank with its balance sheets.

Related

Rescue of Banks Hints at Nationalization (January 16, 2009)

At Davos, Crisis Culls the Guest List (January 26, 2009)

Room for Debate: Nationalizing the Bank Problem (January 22, 2009)

Times Topics: Credit Crisis -- The Essentials | Economic Stimulus | Nationalization of Banks

 Back Story With The Times’s David E. Sanger

Nationalization could pull the banks out of that dive, at least temporarily, as the government injected capital, hired new managers and ordered a restart to lending. But some Republicans who bit their tongues when President George W. Bushordered huge interventions in the market would charge that Mr. Obama was steering America toward socialism.

Nationalization, said Charles Geisst, a financial historian atManhattan College “is just not a term in the American vocabulary.”

“We think of it,” he continued, “as something foreigners do to us, not something we do.”

It is also something foreigners do to themselves: the British have recently taken a majority stake in the Royal Bank of Scotland.

Some of Mr. Obama’s advisers have asked who the government would get to run the banks. Many of the most experienced executives are tainted by the decisions they made during the age of excess. And how would the government attract the best talent if it demanded that they take minimal pay — a political reality in the current environment?

Another option is for the government to buy the banks’ most toxic assets either through a giant fund, or, more likely, a federally supported bad bank designed to buy up troubled investments. But in that case, taxpayers might well be the losers: They would have all of the banks’ worst assets and none of their performing loans. And unless a deal is worked out to take a larger share of the banks whose bad loans are shuffled off to the government, the taxpayers would not have the chance to benefit by selling the shares back to private investors.

Moreover, cleaning up the banks’ bad assets, without extracting a heavy price for the bank managers, shareholders and their lenders, is exactly what Mr. Summers and Mr. Geithner warned against during the Asian financial crisis.

“We told the Asians that they had to be willing to let banks and companies fail,” said Jeffrey Garten, a professor at the Yale School of Management and a top official in the Clinton administration. “We warned that there was great moral hazard if governments just bailed them out.”

“And now,” he said, “we are doing the polar opposite of our advice.”

Enlarge This Image

Mark Wilson/Getty Images

Speaker Nancy Pelosi has alluded to internal debate over whether large banks should be nationalized, while aides to President Obama have avoided the word and are looking into alternatives.

Related

Rescue of Banks Hints at Nationalization (January 16, 2009)

At Davos, Crisis Culls the Guest List (January 26, 2009)

Room for Debate: Nationalizing the Bank Problem (January 22, 2009)

Times Topics: Credit Crisis -- The Essentials | Economic Stimulus | Nationalization of Banks

 Back Story With The Times’s David E. Sanger

Privately, most members of the Obama economic team concede that the rapid deterioration of the country’s biggest banks, notably Bank of America and Citigroup, is bound to require far larger investments of taxpayer money, atop the more than $300 billion of taxpayer money already poured into those two financial institutions and hundreds of others.

But if hundreds of billions of dollars of new investment is needed to shore up those banks, and perhaps their competitors, what do taxpayers get in return? And how do the risks escalate as government’s role expands from a few bailouts to control over a vast portion of the financial sector of the world’s largest economy?

The Obama administration is making only glancing references to those questions. In an interview Sunday on “This Week” on ABC, the House speaker, Nancy Pelosi, alluded to internal debate when she was asked whether nationalization, or partial nationalization, of the largest banks was a good idea.

“Well, whatever you want to call it,” said Ms. Pelosi, Democrat of California. “If we are strengthening them, then the American people should get some of the upside of that strengthening. Some people call that nationalization.

“I’m not talking about total ownership,” she quickly cautioned — stopping herself by posing a question: “Would we have ever thought we would see the day when we’d be using that terminology? ‘Nationalization of the banks?’ ”

So far, President Obama’s top aides have steered clear of the word entirely, and they are still actively discussing other alternatives, including creating a “bad bank” that would nationalize the worst nonperforming loans by taking them off the hands of financial institutions without actually taking ownership of the banks. Others talk of de facto nationalization, in which the government owns a sizeable chunk of the banks but not a majority, with all that connotes.

That has already happened; taxpayers are now the biggest shareholders in Bank of America, with about 6 percent of the stock, and in Citigroup, with 7.8 percent. But the government’s influence is far larger than those numbers suggest, because it has guaranteed to absorb the losses of some of the two banks’ most toxic assets, a figure that could run into the hundreds of billions of dollars.

Many believe this form of hybrid ownership — part government, part private, with the responsibilities of ownership unclear — will not prove workable.

“The case for full nationalization is far stronger now than it was a few months ago,” said Adam S. Posen, the deputy director of the Peterson Institute for International Economics. “If you don’t own the majority, you don’t get to fire the management, to wipe out the shareholders, to declare that you are just going to take the losses and start over. It’s the mistake the Japanese made in the ’90s.”

“I would guess that sometime in the next few weeks, President Obama and Tim Geithner,” he said, referring to the nominee for Treasury secretary, “will have to come out and say, ‘It’s much worse than we thought,’ and just bite the bullet.”

So far the Obama administration has signaled that it is trying to avoid that day, and members of its economic team — among them Mr. Geithner and the president’s top economic adviser, Lawrence H. Summers — made the case during the Asian financial crisis in the 1990s that governments make lousy bank managers.

Indeed, the risks of nationalization they warned about then apply equally to the United States now. The first is that nationalization can prove contagious. If the Obama administration took over Bank of America and Citigroup, two of the largest banks in the United States, private investors could decide to flee from the likes of JPMorgan Chase andWells Fargo, or other major banks, fearing they could be next.

Moreover, Mr. Obama’s advisers say they are acutely aware that if the government is perceived as running the banks, the administration would come under enormous political pressure to halt foreclosures or lend money to ailing projects in cities or states with powerful constituencies, which could imperil the effort to steer the banks away from the cliff.

“The nightmare scenarios are endless,” one of the administration’s senior officials said.

The argument in favor of nationalization, even a brief nationalization of a few months or years, is straightforward: It might be the only way to pull America’s largest financial institutions out of the downward spiral that makes it enormously difficult to raise the capital they need to keep operating.

Nationalization Gets a New, Serious Look

(Page 2 of 2)

Right now, many banks are reluctant to write off their bad debts, and absorb huge losses, unless they can first raise enough capital to cushion the blow. But they cannot attract that capital without first purging their balance sheets of the toxic assets. Japan’s experience proved the dangers of that downward swirl; the economy stagnated, new lending ground to a halt and the country’s diplomatic clout shrank with its balance sheets.

Related

Rescue of Banks Hints at Nationalization (January 16, 2009)

At Davos, Crisis Culls the Guest List (January 26, 2009)

Room for Debate: Nationalizing the Bank Problem (January 22, 2009)

Times Topics: Credit Crisis -- The Essentials | Economic Stimulus | Nationalization of Banks

 Back Story With The Times’s David E. Sanger

Nationalization could pull the banks out of that dive, at least temporarily, as the government injected capital, hired new managers and ordered a restart to lending. But some Republicans who bit their tongues when President George W. Bushordered huge interventions in the market would charge that Mr. Obama was steering America toward socialism.

Nationalization, said Charles Geisst, a financial historian atManhattan College “is just not a term in the American vocabulary.”

“We think of it,” he continued, “as something foreigners do to us, not something we do.”

It is also something foreigners do to themselves: the British have recently taken a majority stake in the Royal Bank of Scotland.

Some of Mr. Obama’s advisers have asked who the government would get to run the banks. Many of the most experienced executives are tainted by the decisions they made during the age of excess. And how would the government attract the best talent if it demanded that they take minimal pay — a political reality in the current environment?

Another option is for the government to buy the banks’ most toxic assets either through a giant fund, or, more likely, a federally supported bad bank designed to buy up troubled investments. But in that case, taxpayers might well be the losers: They would have all of the banks’ worst assets and none of their performing loans. And unless a deal is worked out to take a larger share of the banks whose bad loans are shuffled off to the government, the taxpayers would not have the chance to benefit by selling the shares back to private investors.

Moreover, cleaning up the banks’ bad assets, without extracting a heavy price for the bank managers, shareholders and their lenders, is exactly what Mr. Summers and Mr. Geithner warned against during the Asian financial crisis.

“We told the Asians that they had to be willing to let banks and companies fail,” said Jeffrey Garten, a professor at the Yale School of Management and a top official in the Clinton administration. “We warned that there was great moral hazard if governments just bailed them out.”

“And now,” he said, “we are doing the polar opposite of our advice.”