GOP Senator Sees Bank Nationalization
Greg Brown
U.S. Sen. Lindsey Graham (R-SC), a member of the Senate Banking Committee, says that nationalization might turn out to be the best answer for what many observers have called an "insolvent" U.S. banking system.
Graham took the position on Sunday on ABC's "This Week" program.
"This idea of nationalizing banks is not comfortable, 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 — something no one likes," Graham told host George Stephanopoulos.
President Barack Obama and Treasury Secretary Tim Geithner last week began the second portion of the origional $700 billion bank rescue plan by saying that it expects to spend much more, perhaps $1.5 trillion in buying up bad assets and in support for new lending.
The focus, though, would be on finding private investors, not outright nationalization.
"We want to retain a strong sense of private capital, fulfilling the core investment needs of this country," Obama told ABC's "Nightline" program.
NYU economist Nouriel Roubini, among others, has flatly stated that U.S. bank are incapable of digging their own way out of the current mess.
"The United States banking system is effectively insolvent," Roubini told The New York Times.
Roubini estimates that total losses on loans by U.S. financial firms and the fall in the market value of their assets will reach $3.6 trillion, up from his previous estimate of $2 trillion, according to the newspaper.
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