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Thursday, 19 February 2009
Greenspan urges bank nationalisation
The US government may have to temporarily nationalise the country’s banks until the sector is reformed, the former chairman of the US Federal Reserve, Alan Greenspan, has said.
(NEW YORK) The US government may have to temporarily nationalise the country’s banks until the sector is reformed, the former chairman of the US Federal Reserve, Alan Greenspan, has said.
In an interview with the Financial Times published on the paper’s website on Tuesday, Mr. Greenspan said that ‘it may be necessary to temporarily nationalise some banks in order to facilitate a swift and orderly restructuring’. Long one of the world’s most powerful proponents of hands-off financial regulation, Mr. Greenspan indicated nationalisation may now be necessary.
‘I understand that once in a hundred years this is what you do,’ he said.
He also highlighted the importance of building up banks’ capital. ‘Banks are not going to increase their lending until they feel comfortable with the amount of capital they hold,’ he said. ‘That’s not going to happen for a while.’
The 82-year-old economist also stressed the importance of halting the decline in house prices that is battering banks. ‘Until we can stabilise the asset side of bank balance sheets, this crisis will not come to a close,’ he said.
Widely hailed while in office, Mr. Greenspan has seen his legacy tarnished since he stepped down in 2006, as critics accuse him of failing to head off the current economic malaise.
‘In some cases, the least bad solution is for the government to take temporary control,’ he said.
Other countries are already making similar moves. Ireland on Tuesday got the green light from the European Commission to nationalise the beleaguered Anglo Irish Bank. Just on Monday, Germany came one step closer to its first bank nationalisation since the 1930s.
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Greenspan urges bank nationalisation
Bloomberg
19 February 2009
(NEW YORK) The US government may have to temporarily nationalise the country’s banks until the sector is reformed, the former chairman of the US Federal Reserve, Alan Greenspan, has said.
In an interview with the Financial Times published on the paper’s website on Tuesday, Mr. Greenspan said that ‘it may be necessary to temporarily nationalise some banks in order to facilitate a swift and orderly restructuring’. Long one of the world’s most powerful proponents of hands-off financial regulation, Mr. Greenspan indicated nationalisation may now be necessary.
‘I understand that once in a hundred years this is what you do,’ he said.
He also highlighted the importance of building up banks’ capital. ‘Banks are not going to increase their lending until they feel comfortable with the amount of capital they hold,’ he said. ‘That’s not going to happen for a while.’
The 82-year-old economist also stressed the importance of halting the decline in house prices that is battering banks. ‘Until we can stabilise the asset side of bank balance sheets, this crisis will not come to a close,’ he said.
Widely hailed while in office, Mr. Greenspan has seen his legacy tarnished since he stepped down in 2006, as critics accuse him of failing to head off the current economic malaise.
‘In some cases, the least bad solution is for the government to take temporary control,’ he said.
Other countries are already making similar moves. Ireland on Tuesday got the green light from the European Commission to nationalise the beleaguered Anglo Irish Bank. Just on Monday, Germany came one step closer to its first bank nationalisation since the 1930s.
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