Bob Cropf

Blinder on Nationalization of Banks

In 1 on March 8, 2009 at 10:32 AM

Blinder commented on nationalization of banks in today’s New York Times. He is an opponent and offers some good arguments. There are some reasons that his qualms may not be entirely accurate. Krugman is not pleased.

First, he states we have 8,300 banks. True, a lot of those have already collapsed and had the FDIC take over (FDIC just got a $100b credit line to cover more and bigger bank failures). A lot will collapse in the future regardless of whether or not nationalization takes place. The point is that no one is advocating (to my knowledge) nationalizing ALL banks. Isn’t it a bit nonsensical to categorize Smalltown Bank in the same category as Citi, Bank of America, JP Morgan, and Wells Fargo?

Second, Citi, BoA, JPM, and WF account for 64% of commercial bank assets (check out pie chart).

– KC

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