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717richboy's avatar

What two banks did President George Bush nationalize?

Asked by 717richboy (234 points ) March 14th, 2012

Thank you in advance.

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13 Answers

marinelife's avatar

Bush did not nationalize the bands. He simply invested US funds in the banking system.

JLeslie's avatar

The federal monies given to banks did spur on big banks eating up other banks. But nationalize a bank? Do you mean the government owns and runs the bank?

thorninmud's avatar

Bush’s 2008 TARP plan gave the government partial ownership of nine banks, not two:

Goldman Sachs, Morgan Stanley, JP Morgan, Bank of America, Merrill Lynch, Citigroup, Wells Fargo, Bank of New York Mellon and State Street.

717richboy's avatar

Yes, I guess I mean government owns and runs. Sorry for the confusion.

jaytkay's avatar

If someone is telling you that 2 banks were nationalized, ask them which two.

YARNLADY's avatar

What? This never happened.

JLeslie's avatar

@thorninmud Are you sure partial ownership is right? I think of it as a loan that was giving. My husband’s bank has paid back the loan in full. They did have to do a lot of reporting once Obama tightened up the requirements that came along with taking the money, but the government did not own a part of the bank. To clairfy, my husband’s bank is not one of the ones you listed.

My husband said that basically they were forced to take the money, even though they could have done fine without it. Banks who did not take, ran more risk of being taken over by other banks who did take money.

thorninmud's avatar

@JLeslie Here are the terms of the 2008 TARP bailout. Treasury bought “senior preferred” stock in the banks. Stock is an ownership stake. Preferred stock doesn’t confer voting rights, but the TARP also gave Treasury warrants (similar to an option) to buy a smaller amount of common stock, which does confer voting rights.

This amounts to a loan, because the bank agreed to pay a certain dividend on the preferred shares (like interest on a loan), and the government allowed them to buy back the shares (like repaying a loan). But it was still technically an ownership stake.

JLeslie's avatar

@thorninmud Ok, thanks for the explanation. But the right wing portrayed it as something that it wasn’t in my opinion. Would you agree?

tedd's avatar

There hasn’t been a nationalized bank in the US since the early 1800’s.

The Founding Fathers had set one up at the birth of the nation though, ironically enough. Funny which parts of the Founding Fathers creed the far right likes to emphasize and which parts it likes to ignore these days.

http://en.wikipedia.org/wiki/Bank_of_North_America

thorninmud's avatar

@JLeslie I’m not sure exactly which claims by the right you mean. The main distortion by the right, I think, has been making it look like the bailouts were all Obama’s idea, when they were actually launched by Bush.

There has been opposition to the bailouts from both sides though, typically to the effect that this created a “moral hazard”, in other words that the bailout protected the banks from reaping the consequences of their risky behavior, thus removing any incentive to behave responsibly. Many on the left framed it as “privatizing profits while socializing risk”.

In the end, I’m not sure what to believe. The TARP bailouts will end up costing very little, as it turns out. We’re still on the hook for a lot of the money we gave to AIG, but we actually made money on many other bailouts. Many argue that it was an artificial crisis, and that the consequences of not bailing out wouldn’t have been so dire. Others say the consequences would have been catastrophic. I have no idea who’s right.

JLeslie's avatar

@thorninmud I’m a democrat and fairly liberal, and I too have mixed feelings about the bank bailouts. I was only intending to say that the right has worded things so that many of It’s constituents believed the government was trying to take over banks. It fed into the socialist hysteria.

thorninmud's avatar

@JLeslie Oh yeah, the socialist hysteria. AKA “government takeover”. God save us.

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