Nationalizing Financial Institutions

Disclosure: I have been a financial institution regulator since the 70's

All the bluster, outrage and discussion about nationalizing financial institutions reminds me of that great line in Casablanca:

Captain Renault: I'm shocked, shocked to find that gambling is going on in here!

We do it all the time. We nationalize financial institutions frequently -- in recent months it's done weekly. We just call it "conservatorship".

When an insured financial institution is found unsafe and unsound, the regulator has many powers, one of which is conservatorship. This power is used frequently primarily because once a financial institution is under conservatorship: the Agency can repudiate contracts, leases, commitments, or any other threats to the assets of the financial institution. This often makes it the preferred method of handling an unsafe and unsound situation. They can replace management or direct them. They can close offices or open new ones. The stock holders are paid nothing and go away and the Agency becomes the governing body. We can operate it, liquidate it, split it into "good" and "bad" banks, sell off assets, "sell" deposits, merge it, convert it -- do whatever is in the best interest of the deposit insurance fund and therefore the Nation.

It is nationalization and it has been working fine since the 30's and we didn't all become Communists or close down capitalism because of it.

It is a boogeyman argument and I'm tired of it.

Here's a press release announcing a conservatorship last year. See if you can tell the difference between conservatorship and nationalize:

Valley Credit Union Placed In Conservatorship
Valley Credit Union is Open and Operating, Member Accounts are Safe and Federally Insured

September 3, 2008, Alexandria, Va. -- The National Credit Union Administration (NCUA) yesterday assumed control of the operations of Valley Credit Union, a state-chartered, federally insured credit union headquartered in San Jose, California.

The California Division of Financial Institutions appointed NCUA as conservator after placing Valley Credit Union into state conservatorship. NCUA will operate the credit union with a goal of continuing credit union service to the members and to ensure safe and sound credit union operations.

Service continues uninterrupted at Valley Credit Union and members are free to make deposits, access funds, make loan payments and use share drafts. While the credit union was placed into conservatorship because of declining financial condition, the decision to conserve a credit union enables the institution to continue normal operations with expert management in place. . .

I wish they would shut the F up and just let us do our jobs. Quit trying to scare the public. Nationalizing is not the boogeyman CNBC is trying to sell.

(cross posted over at Daily Kos)

Good Cartoon

The provision in the Stim that drives me the most over the bend is the capital gains tax break. Who is sitting on capital gains during these times of stocks and home prices tanking?!! How many jobs will that tax break create??
hat tip Left 'Toon Lane

Bonuses on Wall Street

I keep hearing this excuse for bonuses for Wall Street -- it's a carry over from when they were partnerships and had low pay and their real renumeration was the partner dividend or bonus. Really?

So back in the day of partnerships, what happened when the firm didn't make a profit? Answer: the partners ponied up more money to recapitalize the firm.

When they were a partnership, they had fiscal responsibility and consequences. But now when they have faceless stockholders and taxpayers picking up the losses, we owe them both big salaries and big bonuses just like they were profitable and successful.

Bull shit!

When is someone from the MSM going to call them on this?

I Guess I'm NOT Angry

When compared to others, I'm not angry -- I'm as cool as a cucumber!

Delicious Bob Cesca over at Huffington Post said something about the Republithugs going insane. I clicked through some of his links to see how much he was exaggerating, and was shocked. I hadn't visited very many right sites in quite awhile (besides the smart Andrew Sullivan) There is no discourse anymore. Cesca is right -- they are insane. I won't link because I don't want the trackback but on the top-half of the front-page of Sadly No! I found

Harry Truman was either a Communist, an ultra-Communist, or a super-ultra-mega-Communist ... coloreds ... pickaninnies ... Baby Daddy would go on to father a dozen fewer illegitimate children than he had originally planned for that night’s wilding ... hoity-toity airy-fairies with their binkum-buncombe and hocus-pocus ... The delusional brayings of the naysaying recession Eeyores are utterly discredited by every relevant economic indicator ... that vile Negro in the White House

. GAWD!

The lovely Sara over at the intelligent Orcinus has an excellent article today warning us that the hatred being spouted by the right wing media has very serious consequences. She uses the deranged writings of James Adkisson who shot up a church and says it was so he could kill all the liberals. She points the finger at

Hannity, Goldberg, Limbaugh, Savage and O'Reilly -- and all your lesser brethren who keep the hate speech spewing 24/7/365

. She's right but we need to extend the list to these hate filled and vile bloggers. This is gotten a lot worse than before the election. Is it because Obama's black or would any Democrat have been treated likewise? I suspect the latter because I can't imagine them practicing civility with Hillary.

ARGH!

I am so Angry!

How dare Lindsay Graham say ANYTHING about the stimulus bill! He has our economy's blood on his hands. His party eliminated regulatory oversight, laws, controls -- it's their doing that the banks got into the securities business. He promoted free market without accountability. The Republithugs are responsible for the Enron loophole. It was another "great" Republithug, Phil Graham's delusional words coming out of McCain's mouth during the campaign: "The fundamentals of the economy are strong." Phil Graham said the recession was all delusional and we are a nation of whiners. And now we have to listen to the ravings of these delusional Republithugs?! They should all go hide in a hole.

Lindsay Graham said yesterday:

You can blame George Bush all you want to, but he didn't write this bill, y'all did. This is your bill. It needs to be America's bill. ...
The process that's led to this bill stinks. There is no negotiating going on here! Nobody is negotiating! ...

He's wrong. I don't blame George Bush -- I blame Phil Graham and the other Republithugs that got rich beyond dreams while selling the middle class and tax payers out. And when did the Republithugs negotiate with the Democrats over all the garbage that was shoved down our throats for the past 8 years?

Oh!!! It's soooo expensive!!! You'd think they're close to getting the vapors. Here's the truth. Here's chart that shows the comparison of the sost of the stimulus bill to other Republithug spending (hat tip to FDL).

Tom Daschle

Everybody is all a titter about Tom Daschle withdrawing today. MSM is questioning Obama's judgement. EEK the Sky is falling!

I blame Tom Daschle. We need him to get universal health care. He had the connections, clout, spine, and nerve to push this through. He had a well defined and articulated program on the shelf. BUT He KNEW he had these problems in his background. He also had to know that the Reputhugs would turn over every stone to avoid confirming him. Why didn't he give Obama a heads up BEFORE the nomination? He then could have served as an unconfirmable advisor and we would have gotten his clout and expertise. Now he's stained and out. GRRRR -- I'm really disappointed in him.

But I have a solution -- not as powerful in the Senate but maybe even more powerful in the court of public opinion and certainly knowledgeable enough: Doctor Howard Dean.

In case anyone is foolish enough to want to offer me a position that needs confirmation -- forget it. I have many sins hidden under rocks that would prevent me from being confirmed. But I can still work in your administration . . . anyone?? . . . hello??

Joel Connelly Spouts Ignorance

Joel Connelly's column on Sunday takes the side of pharmacists who are forced against their poor fragile sensibilities to disburse emergency contraceptives. He cites a poor pharmacist who:

... is able to practice her profession thanks to an injunction by U.S. District Judge Ronald Leighton, who suspended a state regulation. It requires pharmacies to dispense Plan B and permits individual pharmacists to decline only if a fellow worker on hand at the same store will supply the drug.

Connelly concudes:

I'd argue for a policy of conscience and respect. The pharmacist should not be forced into a Hobson's choice: Violate conscience or pay the penalty of losing your job.

And then Connelly states: that a

. . . scribe can write a column sympathetic to the pro-life viewpoint.

Here's my response that I sent to him:

Unfortunately you have the facts wrong in your column of February 1, 2009. The morning after pill does not cause an abortion. It does not kill a fetus or even a blastemas. Plan B or Levonorgestrel simply prevents a pregnancy after unprotected sex or contraceptive failure. It is NOT an abortion pill and cannot terminate an existing pregnancy. Certain groups who are against contraceptives have deliberately used framing and word choices to tie their cause with the more emotional anti-abortion cause and have almost successfully confused the 2 issues. You have fallen victim to their confusing rhetoric.

Also being "anti-abortion" is not automatically "pro-life". Just as being "pro-choice" is not "anti-life". Again, you are confusing the rhetoric of groups with an agenda with facts.

Finally I wonder if your support for "a policy of conscience and respect" would extend to an anesthesiologist who doesn't believe in administering drugs? Or a pediatrician who cannot in good conscience provide vaccinations? Or a veterinarian who refuses to euthanize even dangerously sick animals?

If people cannot in good conscience do their job, in my opinion, they should find another field.

Debbie Wasserman Schultz's Betrayal

Debbie Wasserman Schultz (DWS) waited until October 26th before she supported Annette Taddeo -- after months of defending Ileana Ros-Lehtinen. This was a BIG deal since DWS was co-chair of the Democratic Congressional Campaign Committee’s (DCCC) Red to Blue initiative. Instead DWS lavished compliments on Ileana. "I can't say enough good things about Ileana Ros-Lehtinen; she has been my friend since I was first elected to office," Wasserman Schultz said, noting she relied on Ros-Lehtinen's advice to help balance the demands of elected office and motherhood."

So now we all have to pay the price for your friendship -- Ileana voted AGAINST the Lilly Ledbetter Fair Pay Act and AGAINST the stimulus package.

Thanks Debbie! Still glad you protected your girlfriend?

(WA Post photo)

Banks Would Love to Make Loans

I'm so tired of the lies the Reputhugs are stating about we just need to get banks to start loaning again. Today on Meet the Press Senator Kay Baily Hutchison, between her chanting the refrain "cut taxes, cut taxes, cut taxes" also said:

SEN. HUTCHISON: ... I cannot step back from the principle that I think is so important for my constituents and for our country, that we would do a stimulus package that has job creation, keeping people in their homes, trying to get the financial institutions to get credit out in the marketplace, which it is not doing now, and ...

What alternative universe does she live in? NO ONE is standing in line to buy cars or homes. Car sales have plunged to just over a 10 million annual rate - the lowest rate since the early '80s recession. Home sales are the lowest since 1966. Circuit City can't get folks to come in even for their clearance sale. Retailers reported the worst December sales in decades. People are afraid for their jobs. People have seen their investments disappear and they are over extended and afraid. It has nothing to do with financial institutions being unwilling to lend -- financial institutions are experiencing dwindling loan-to-asset ratios. They have sub-performing loan portfolios and they can't get any yield in investments. They would LOVE to make good loans.

Kay Baily Hutchison should try to look at facts instead of reputhug talking points and if the media is going to fawn all over these reputhugs and put them on their shows, they should fact check and challenge them once in awhile.

DISCLOSURE: I have been a financial institution regulator for over 30 years.