A few weeks ago Steve Randy Waldman had a nice post titled Real Capitalists Nationalize. His argument:
The superficially private-sector-friendly Paulson Plan is likely to entail socializing losses and undermining the incentives that give capitalism its efficacy and its legitimacy. Outright nationalization, on the other hand, may look like a Commie statist plot, but strengthens the “invisible hand” in the long run, as long as the nationalization is temporary.
The final version of the bailout law did give Treasury the power to effectively nationalize financial institutions from which it makes big asset purchases. And now, in a development that may be a lot more significant than John McCain pushing a $300 billion plan to buy up mortgages, those ultracapitalist Wall Street Journal editorialists are urging Hank Paulson to use it:
If the feds want to prevent a full-scale rescue of Citigroup, now might be a good time to take Treasury Secretary Hank Paulson’s new powers out for a spin. If Citi needs to raise capital, let the Treasury inject some, along with appropriate housecleaning on the management side and upside for taxpayers.