Ron Paul on Bank Bailouts and Bank Nationalization…what does it mean?

I’m combining an article from the Wall Street Journal and a recent Glenn Beck interview with Ron Paul to maybe help some readers understand the danger of what is going on with these bailouts. But first a couple of quotes from Thomas Jefferson: “I sincerely believe that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.”

“If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered.”

What “Bank Nationalization” Means For You

Heidi N. Moore
The Wall Street Journal
January 22, 2009

It only takes one good bank-stock rout to turn Americans into big believers in government control.

Yesterday’s precipitous plummet in shares of Bank of America, PNC Financial, State Street and other financials may have done the job; the controversy of the day centers around “bank nationalization,” or giving our government the license to run U.S. banks.

Deal Journal provides a primer on what bank nationalization means to the average taxpayer.

What does bank nationalization mean?

Bank nationalization, in the most practical form, means giving the U.S. government the power to control banks. That could mean taking control of the public shares, to the power to pick and install new management and boards of directors, and set corpotate strategy. The shocks of the credit crisis last fall spurred lawmakers to semi-nationalize the banking sector; nearly 314 institutions have already signed over some of their shares and other securities to the Treasury in return for $350 billion in government aid.

The government has taken a dramatic intermediate step toward nationalization by taking effective control of American International Group, Fannie Mae and Freddie Mac, but leaving some of their shares on the public markets and their management in private hands. Proponents of U.S. bank nationalization now envision a program by which the government would take over only the largest banks, for a short period of time, in order to loosen the ties on lending. The government may also inject more capital into the banks if necessary, but the belief is that the presence of a government overlord acts more as an implied guarantee to soothe customers and prevent assets from going out the door.

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