If nothing else is clear in our current crisis, it is that the only thing more bankrupt than the big banks is the debate over whether or not to nationalize them. On This Week this morning, Sen. Richard Shelby (R-AL) said he opposed nationalization but thought insolvent banks should be closed down.
Said Shelby: “I don’t want to nationalize them, I think we need to close them. Close them down, get them out of business. If they’re dead, they ought to be buried. We bury the small banks; we’ve got to bury some big ones and send a strong message to the market. And I believe that people will start investing [again] in banks.”
Something like this is both heartening and insanely distressing at the same time because what exactly does he think people are talking about when people talk about nationalization? They’re talking about some form of FDIC-like takeover, though probably one that would take longer and be much more complicated since you simply can’t find another bank that is going to buy up most or all of Citi’s assets at some knock-down price over the weekend — certainly not in the present climate. You either clean the bank up (which would require what amounts to a de facto bankruptcy proceeding) and sell it back into private hands or break it up and sell it off in individual pieces — likely some combination of the two.
It would be one thing if Shelby were just one more Fox News robot. But he’s the ranking member of the friggin’ Banking Committee.
Josh Marshall is editor and publisher of TalkingPointsMemo.com.