New column: The already-nationalized banks

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I’ve got a new column online and in the issue of TIME with a fraying rope on the cover. It’s not entirely new—bits of it already appeared in a piece I wrote Tuesday—and what I really want to talk about are the other economy-related pieces in the magazine: There’s David von Drehle’s wrenching House of Cards: The Faces Behind Foreclosures. There’s Stephen Gandel’s revealing One Bad Bond, about a deeply toxic CDO-cubed put together in May 2007 by the geniuses at Credit Suisse (the graphic that defines the piece is only available in the dead-tree edition). There’s Adam Zagorin and Michael Weisskopf’s Inside the Breakdown at the SEC, which disabused me of the notion that maybe Chris Cox was just a victim of bad timing. There’s Sean Gregory on the still-thriving business of dentistry (people under stress gnash their teeth a lot). Then there’s that Joel Stein column about the housing market that I already discussed. Even Klein and Poniewozik sort of write about the economy. To think that, when I got to TIME two years ago, it was a big deal to get one little economy-related column or article into the magazine.

Oh, so about that column I wrote. It begins:

Our country’s banking system was effectively nationalized in October when then Treasury Secretary Hank Paulson called the heads of the nine biggest banks into his office and told them they couldn’t leave before agreeing to take billions of dollars of government money and hand over ownership stakes in return.

At least, that’s one way of looking at it. You could also say bank nationalization began in 1984 when regulators decided that Continental Illinois, then the nation’s seventh largest bank, was too big to fail and put the Federal Deposit Insurance Corporation (FDIC) in charge of it. Or maybe the crucial moment came in 1933 when Congress decreed that small depositors should be protected from bank failures by the FDIC. Or in 1913 when Congress created the Federal Reserve System to halt banking panics and regulate the money supply.

You could, if you really wanted to stretch it, go back to the 1864 advent of the national banking system and the first federal bank regulator, the Comptroller of the Currency. Or even the chartering in 1791 of the partly government-owned Bank of the United States–Alexander Hamilton’s baby, which died in 1811, seven years after he did. Read more.