No doubt the banking sector is in dire straits, and this year we’ve seen banks take nearly a billion dollars in bailout money, share prices tank, some banks fail, and others get acquired. Unfortunately, many giants still seem to be on the edge of failure, which has led some prominent government officials and economists to enthusiastically support nationalizing some of the largest banks, including Bank of America and Citigroup.
Nobel Prize-winning economist Paul Krugman, for instance, has claimed that nationalizing banks is as “American as Apple Pie.” While this statement has me worried about what this country is turning into, I also worry about rushing headlong to nationalize banks that could, theoretically bounce back. What’s more, there’s no proof that the government will run banks any better than they’re being run now (especially with the increased government oversight) and plenty of reasons to believe government will do a poorer job.
U.S. News and World Report has put together a list of reasons why “Bank Nationalization Is So Scary,” which are things the public and politicians tend to forget when pondering the perceived benefits of nationalization. While banks will undoubtedly go through a continued rough patch for years to come, once the economy gets back into shape, banks will follow. To nationalize banking giants would be shortsighted and has the potential to create larger problems than the ones we currently face.
Posted by earache 
