# US Bank Nationalization **URL:** \ **Category:** Great Debates\ **Created:** [October 14, 2008, 2:42pm UTC](https://boards.straightdope.com/t/us-bank-nationalization/467867 "2008-10-14T14:42:32Z")\ **Posts on this page:** 10\ **Page:** 2
**Author:** ![villa](https://avatars.discourse-cdn.com/v4/letter/v/bc79bd/32.png) [@villa](https://boards.straightdope.com/u/villa)\ **Post date:** [October 14, 2008, 8:39pm UTC](https://boards.straightdope.com/t/us-bank-nationalization/467867/21 "2008-10-14T20:39:20Z")
> [@](#): > > Under the plan, the government will receive an annual dividend of 5 percent for the first five years and 9 percent after that, the Treasury said. **The government’s stake in the company would be non-voting**. Bolding mine. It’s not nationalization. It’s not socialism. It’s a bail out. ---
**Author:** ![Jas09](https://avatars.discourse-cdn.com/v4/letter/j/d07c76/32.png) [@Jas09](https://boards.straightdope.com/u/Jas09)\ **Post date:** [October 14, 2008, 9:00pm UTC](https://boards.straightdope.com/t/us-bank-nationalization/467867/22 "2008-10-14T21:00:05Z")
> [@villa](#): > > It’s not nationalization. It’s not socialism. It’s a bail out. I don’t know that anyone is disagreeing with you that it is a bail-out. I know I wasn’t. There can be debate as to whether it is “nationalization” - it seems to me that it probably isn’t for exactly the reason you point out. The only part of your initial post I was disagreeing with was this: [QUOTE=villa] What we have is a socialization of risk, without any idea of taking the potential gains out of the hands of the private sector. [/QUOTE] This is obviously not true. The Fed, and by extension the people, will get a piece of any potential gains. ---
**Author:** ![Discordia](https://avatars.discourse-cdn.com/v4/letter/d/b9e5f3/32.png) [@Discordia](https://boards.straightdope.com/u/Discordia)\ **Post date:** [October 14, 2008, 9:00pm UTC](https://boards.straightdope.com/t/us-bank-nationalization/467867/23 "2008-10-14T21:00:37Z")
“bail-out” implies you aren’t getting the money back, which isn’t the case. ---
**Author:** ![villa](https://avatars.discourse-cdn.com/v4/letter/v/bc79bd/32.png) [@villa](https://boards.straightdope.com/u/villa)\ **Post date:** [October 14, 2008, 9:09pm UTC](https://boards.straightdope.com/t/us-bank-nationalization/467867/24 "2008-10-14T21:09:37Z")
> [@Jas09](#): > > I don’t know that anyone is disagreeing with you that it is a bail-out. I know I wasn’t. There can be debate as to whether it is “nationalization” - it seems to me that it probably isn’t for exactly the reason you point out. The only part of your initial post I was disagreeing with was this: > > [QUOTE=villa] > What we have is a socialization of risk, without any idea of taking the potential gains out of the hands of the private sector. This is obviously not true. The Fed, and by extension the people, will get a piece of any potential gains. [/QUOTE] Fair enough. I overstated it. Risk is certainly being socialized, and the potential gains are predominantly being left in the hands of the private sector - what the government has done is provided a forced loan. I haven’t looked at the warrant side of this, but the upside for the state is not huge here as regards the preferred stock. ---
**Author:** ![villa](https://avatars.discourse-cdn.com/v4/letter/v/bc79bd/32.png) [@villa](https://boards.straightdope.com/u/villa)\ **Post date:** [October 14, 2008, 9:11pm UTC](https://boards.straightdope.com/t/us-bank-nationalization/467867/25 "2008-10-14T21:11:09Z")
> [@Discordia](#): > > “bail-out” implies you aren’t getting the money back, which isn’t the case. No it doesn’t. Loans can absolutely be bail outs. ---
**Author:** ![Discordia](https://avatars.discourse-cdn.com/v4/letter/d/b9e5f3/32.png) [@Discordia](https://boards.straightdope.com/u/Discordia)\ **Post date:** [October 14, 2008, 9:14pm UTC](https://boards.straightdope.com/t/us-bank-nationalization/467867/26 "2008-10-14T21:14:21Z")
> [@villa](#): > > No it doesn’t. Loans can absolutely be bail outs. If they are on favorable terms sure, but these are not exactly favorable terms. Partial nationalisation seems a more accurate term. It’s just semantics though. ---
**Author:** ![villa](https://avatars.discourse-cdn.com/v4/letter/v/bc79bd/32.png) [@villa](https://boards.straightdope.com/u/villa)\ **Post date:** [October 14, 2008, 9:17pm UTC](https://boards.straightdope.com/t/us-bank-nationalization/467867/27 "2008-10-14T21:17:03Z")
It’s not semantics. There is no transfer of control. It is not nationalization, partial, total, semi, or otherwise. And while the loans may not be on favorable terms to all the banks, they absolutely are to some of them, who would not be able to obtain that cash inflow otherwise. ---
**Author:** ![China\_Guy](https://avatars.discourse-cdn.com/v4/letter/c/779978/32.png) [@China\_Guy](https://boards.straightdope.com/u/China_Guy)\ **Post date:** [October 14, 2008, 10:53pm UTC](https://boards.straightdope.com/t/us-bank-nationalization/467867/28 "2008-10-14T22:53:08Z")
The initial terms i’ve seen are pretty favorable to the banks. certainly not nearly the lender of last resort terms and conditions laid down by the bank of england (well done BoE for leading the charge!). the warrants aren’t partucularly favorable, have early retirement clauses, and not much in the way of oversight of compensation or risk management. Sheesh a pre-condition should be all compensation capped at $500k/year with exception of stock options/grants/deferred bons that can kick in AFTER the bailouts are repaid. the government should have at least 1 board of director seats and sit on the risk control committee. paulson needs to be reminded he works for the tax payers and not Goldies any more. ---
**Author:** ![ishamael69](https://avatars.discourse-cdn.com/v4/letter/i/b9e5f3/32.png) [@ishamael69](https://boards.straightdope.com/u/ishamael69)\ **Post date:** [October 15, 2008, 1:27am UTC](https://boards.straightdope.com/t/us-bank-nationalization/467867/29 "2008-10-15T01:27:34Z")
> [@Jas09](#): > > The explanation I read earlier today has to do with market information. Paulsen wants to recapitalize _all_ of the big banks to prevent pointing out which ones are hurting and thus causing a run. So, while maybe BofA doesn’t need the money, by forcing them to accept it (rumors are they didn’t want to) the Fed can make it less obvious which banks actually need the money. > > Sort-of cite [here](http://meganmcardle.theatlantic.com/archives/2008/10/the_new_new_paulson_plan_youve.php). So we’re going to take the banks that made bad decisions and damaged our economy and hide them? Why not let them get “run” out of business, or at least have to publically step forward with their hat in hand? Even better now though: We’re punishing the banks that made the right decisions. > [@Czarcasm](#): > > Let me get this straight. > If we nationalize the banks, it’s good for the economy and will strengthen our nation. > If we nationalize healthcare, though, it’s S_O_C_I_A_L_I_S_M and will ruin our nation. I think they are both steps (and not even baby steps) towards socialism. I’m a bit concerned that we look to be headed that way. It scares me that it looks like we’ll have a socialist president soon, too. > [@villa](#): > > It’s not semantics. There is no transfer of control. It is not nationalization, partial, total, semi, or otherwise. > > And while the loans may not be on favorable terms to all the banks, they absolutely are to some of them, who would not be able to obtain that cash inflow otherwise. Okay, so this money is part of the “bailout” package, right? How can you say there is no transfer of control when (1) they are being forced (or strongly pressured at least) to take them, and by taking them, (2) they now have to abide by the regulations that were set forth in the bailout bill (i.e. no golden parachutes, etc.)? Also, the banks apparently don’t have a choice as to the terms of the loans, not even to turn them down. It’s a back door takeover: “Go about your business, we’ll be a silent partner. We’ve got no voting rights. Ummm… Actually can you just do this one thing here to ‘protect the taxpayers?’ Oh yeah, and this other item here. What, you didn’t want our input, well you shouldn’t have relied on the government to bail you out… Wait, you didn’t? Oops, too bad for you anyway.” ---
**Author:** ![villa](https://avatars.discourse-cdn.com/v4/letter/v/bc79bd/32.png) [@villa](https://boards.straightdope.com/u/villa)\ **Post date:** [October 15, 2008, 5:19pm UTC](https://boards.straightdope.com/t/us-bank-nationalization/467867/30 "2008-10-15T17:19:39Z")
> [@ishamael69](#): > > Okay, so this money is part of the “bailout” package, right? How can you say there is no transfer of control when (1) they are being forced (or strongly pressured at least) to take them, and by taking them, (2) they now have to abide by the regulations that were set forth in the bailout bill (i.e. no golden parachutes, etc.)? Also, the banks apparently don’t have a choice as to the terms of the loans, not even to turn them down. > > It’s a back door takeover: “Go about your business, we’ll be a silent partner. We’ve got no voting rights. Ummm… Actually can you just do this one thing here to ‘protect the taxpayers?’ Oh yeah, and this other item here. What, you didn’t want our input, well you shouldn’t have relied on the government to bail you out… Wait, you didn’t? Oops, too bad for you anyway.” That’s no more nationalization than the government passing a law placing regulations on the banking industry. They are still private companies, run by private individuals, for private interests. If you think this is what nationalization is, I would guess you check underneath your bed for lurking commies every night. [Previous page](https://boards.straightdope.com/t/us-bank-nationalization/467867.md?page=1)