Pandit the Bandit, Bank Nationalization and the National Question
March 21, 2009, 12:14 AM
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Reuters writes:
Citigroup Inc awarded Chief Executive Vikram Pandit $10.82 million of compensation in 2008, a year when the government propped up the bank with $45 billion of capital.
Norman Thomas scoffed at
Republican accusations that FDR is a "socialist." No socialist, Thomas explains, would stage a short-term government takeover of the banks, only to return them once they were solvent to the same Wall Street millionaires who broke them in the first place.
US regulations assume the largest banks would never fail. Sadly these banks often aren't �American� in any meaningful sense. Often, their ownership is largely foreign, their management are either foreigners, recent immigrants or their descendants,a lot of their depositors are foreigners, and many of their employees are recent immigrants or guest workers. Just maybe, this is part of the problem. The easiest way to rob a bank is to own it. The next easiest way is to run a bank's databases. Until a new management team is installed at these failed banks, there is no way to understand what happened.

Nationalization of the Federal Reserve system makes sense. We can admit Citigroup et al have failed and distribute control of those institutions among sound banks-even if those banks require government investment to take on responsibility to the depositors at failed banks. The smaller banks can then choose a new management team and sort the mess out.

Banking is inherently a privileged business. Any business subject to government guarantees like FDIC protection should be required meet the same requirements for employees and investors as the Presidency. Having sensitive bank databases controlled by young people far from home—or outsourced to countries where a background check can't even be—done is absurdly risky.