Let’s step back from the last 48 hours worth of insanity in banking stocks. (Bank of America and others plunged on Monday and seem to be recovering today.) Let’s step back further, beyond the immediate problems of how to bail out or repair the banks. What are banks likely to look like in a few years? After all, Wall Street, as we once knew it, is now gone with all the investment houses having either disappeared or turned themselves into bank holding companies. The idea of nationalization has been out there but that, I think, is a loaded word and not quite right. We’ve already lost our virginity by partially nationalizing the banks when we put taxpayers money into them and we’re likely to do much more before it’s over. With it’s connotations of South American guerrillas in fatigues, nationalization carries a lot of dire implications. It’s also a misnomer since no one really thinks Citigroup or Wachovia are about to become wholle federally owned and run.
This is a companion discussion topic for the original entry at https://talkingpointsmemo.com/?p=146835