February 20th, 2009
02:20 PM ET
10 years ago

Top senator says some banks may be nationalized

Dodd said a short term nationalization of banks may be unavoidable.

Dodd said a short term nationalization of banks may be unavoidable.

WASHINGTON (CNN) - Senate Banking Committee chairman Christopher Dodd suggested Friday that some troubled banks might need to be nationalized in the short term.

“I don’t welcome that at all, but I could see how it’s possible it may happen,” Dodd told Bloomberg’s Al Hunt when asked about nationalization. “I’m concerned that we may end up having to do that, at least for a short time.”

Shares in Citigroup and Bank of America fell Friday amidst fears that the two institutions could soon lose their independent status in a government takeover.

Dodd isn’t the first senator to hint at a government takeover of financial institutions. Republican Lindsey Graham of South Carolina said this week that the nationalization option should “remain on the table” if banks fail a "stress test" applied by the Treasury Department.

White House press secretary Robert Gibbs responded to the nationalization fears on Friday, assuring the public that the administration “continues to strongly believe that a privately held banking system is the correct way to go, ensuring that they are regulated sufficiently by this government.”

UPDATE: Sen. Charles Schumer, who initially rejected the idea of nationalization, told The Huffington Post Friday that a government takeover of banks could be an option, but only as a last resort.

"It should be the last arrow in the quiver," Schumer said. He distinguished between short-term and long-term takeovers, explaining that an extended takeover would be "bad nationalization" because governments have historically proven to be poor managers of assets in the long run.

But short-term nationalization, he said, would allow the government to wipe out shareholders in "zombie banks" and clean up management before turning the banks back over to the private sector.

Filed under: Chris Dodd
soundoff (175 Responses)
  1. AD

    See Mourice's comment. Right on!


    February 20, 2009 03:32 pm at 3:32 pm |
  2. Larry

    Why are the Democrats O.K. with this? Has our country been that bad for you and your parents that you are for Socialism now ?

    February 20, 2009 03:33 pm at 3:33 pm |
  3. will

    We still have the other half of the problem from the previous administration. The Bush adminstration is out, but the idiot Democrats with too much power...Pelosi, Reid, Frank, Schumer and this clown are still around to plunder America! The listed people are dangerous to our econcomy and our future success....

    February 20, 2009 03:35 pm at 3:35 pm |
  4. AVEE capitalcityVA

    Time to make the banks pay the people for their mistakes. All the money CEOs took from ailing banks and any other company asking for a handout, should be paid back to the employees that the greedy execs cause to loose their jobs.

    Banks don't need gov't money, they have plenty of money in forclosed homes. President Obama need to execute and Executive Order and force banks to reinstate all the forclosed loans at fair market prices and lower interest rates to put people back in their homes.
    I guarantee banks will be just fine.

    No tax payer money needed. And banks get "toxic" loans off the books. Also refinance the homes that are underwater. Before long those will be in forclosure. We need to stop throwing good money after bad.

    The auto industry need to stop making cars. If you don't sell what you have, why are you making something new at a higher cost and not much different than the previous year model? The auto industry has been playing the oil game. Instead of getting ahead of the game in new energy efficient cars, they were in bed with the oil barrons. You reap what you sew.

    February 20, 2009 03:35 pm at 3:35 pm |
  5. Scott, British Columbia, Canada

    I work for Royal Bank of Canada – I can tell you from experience that nationalizing the banking industry is not socialism nor communism. We have one of the strongest and stable banking systems in the world...I defy anyone to argue that point.

    As I read the comments about the end of capitalism and beginning of socialism I have to shake my head and wonder. How well did it work out for you with a banking system that is privatized?

    February 20, 2009 03:35 pm at 3:35 pm |
  6. Dan, TX

    let them fail, who cares if the streets are littered with mother's holding their babies while begging for food. That's their fault for being losers. That is the republican philosophy as far as I can tell.

    February 20, 2009 03:40 pm at 3:40 pm |
  7. Richard

    The last 8 years were better than the obamanation we have now.

    February 20, 2009 03:41 pm at 3:41 pm |
  8. Brian L

    Some banks should be.... If they are too big to fail and they obviously aren't set up to do the right things then the nation should take them over to re-organize them.

    February 20, 2009 03:41 pm at 3:41 pm |
  9. worriedmom

    Here we go! Didn't take long for "change" to start happening! Why are we even listening to Dodd (he should be ousted for his Sweetheart deal on his houses). and how in the world do you nationalize for a while!!! comeon we are not stupid, this was your plans all along. Bush may have started the ball rolling, but Obama and crew are taking it downhill!!

    February 20, 2009 03:41 pm at 3:41 pm |
  10. Befuddled

    How in God's name can anyone in their right mind expect President Obama to dismantle in 2 months what Bush took 8 years to create?
    The Republican Party has become so subserviant to the World Conglomerate power base that it will do anything to regain it's lost political control of the country, even if means bushwacking the efforts of a true American elected by a landslide, President Barack Obama.
    Media mouthpieces like Sean Hannity and Bill O'Reilly , two Irish Americans who evidently forgot their poor Irish roots, nightly feed us Republican propaganda with that "I'm watching out for you" carny sounding line. Do they really think the average American believe's that stuff? This ain't Deutchland circa 1933, you dumbos!

    February 20, 2009 03:41 pm at 3:41 pm |
  11. paman

    I guess Dodd needs a new mortgage thats why he's nationalizing the banks.

    February 20, 2009 03:42 pm at 3:42 pm |
  12. Steve (the real one)

    JTCnVT February 20th, 2009 2:46 pm ET
    What the republicans forget is this is THEIR MESS. Less government oversight of the banking industry, easier mergers reducing the amount of banks out there. We don't want to talk about Bush 42 and his bailout of the failed savings and loans, that also must have been the Democrats because they are the ones that came up with Reagenomics.
    What YOU forget is Clinton planted this seed when he ordered banks to loan to those who had no way of paying back. Why is this fact left out of your rant? Maybe it didn't fit into your partisan politics or do you just hate republicans and find it easier to blame them rather than placing some of the blame on YOUR own party?

    February 20, 2009 03:43 pm at 3:43 pm |
  13. Big Dick Hurtzer

    Baah Baah Bunch of sheep. All of you queers crying. I hope it all goes to hell so people like you that whine about how it is all unfair and this side f-d up. Always pointing fingers, people such as you who choose sides and make a big deal outta all this are the problem. Move to Korea and start a new life of leisure. Plant your own crops and live off the land.

    February 20, 2009 03:45 pm at 3:45 pm |

    Swiss banks were once nationalized and sold back when they became solvent. And, gues what? They remained the strongest of banks for the longest of times, even now. The US can do the same thing.

    February 20, 2009 03:45 pm at 3:45 pm |
  15. Robert

    I believe Obama said today he is NOT in favor of nationalizing banks.

    February 20, 2009 03:45 pm at 3:45 pm |
  16. Dave, DE

    Thank you GOP and Bush for destroying our economy! The GOP wonder why they dont have a single congressional seat in the entire Northeast?


    Shut your mouths, stop pointing fingers,and help fix the problems that you have made

    February 20, 2009 03:46 pm at 3:46 pm |
  17. thomas

    The economy is like a baby. It has to be nurtured and cared for to grow strong and healthy. If abused, it must be handed over to another more responsible for the welfare of all, not just the stockholders. The banks have maybe a year to get their house in order before Uncle Sam arrives to take over.

    February 20, 2009 03:46 pm at 3:46 pm |
  18. Darryl MIller

    America, Wake up!!!! The Bank CEO and CFO are robbing us all and congress and the law does not give a water fall about it. Please put your banks on notice, Check out how much their salaries are and put them on notice....

    If the are getting paid over $ 500,000.00 a year move your money now... You might just realize that's your money......

    Do you ever look at a robber just taking your personal belonging and your sitting in the front yard watching ... Guess what it's happening.

    Call on your elected officials to act now and get new compliance Officers out there now... Where are the Regulators??? Ops... They where fire by President Bush...

    February 20, 2009 03:48 pm at 3:48 pm |
  19. Joseph

    The the rule of the market prevailed. Big or small, let the banks who burdened themselves with excessive debt failed. Next time, reasonable loans will be granted to reasonable consumers by reasonable banks. Let us not call ourself a market based economy while acting like a communist OR Socialist nation. The president and the administration officials should be mindful of this because some of us suspected a socialist agenda. If it barks like a dog and sleeps like a dog, then it is a dog. Remember Sara Palin in the last few weeks in October of 2008 when they called the other candidate a "SOCIALIST" OR "SPREAD THE WEALTH" slogan by Senator JOHN M from Arizona.

    February 20, 2009 03:48 pm at 3:48 pm |
  20. Slider

    Everytime Dodd the Chimp talks, your investments tank.

    Hey Progressives, what are you gonna do when no one has a retirement anymore?


    February 20, 2009 03:49 pm at 3:49 pm |
  21. Ray

    How can it be that US corporations will pay 183 billion in income tax in 2009 while individual tax payers will pay 1.03 trillion! Does this makes sense?

    February 20, 2009 03:50 pm at 3:50 pm |
  22. Dont blame me

    The time is soon approaching for all GOOD Americans to march on Washington and demand that Obama and his henchmen; Pelosi, Reid, Murtha, Durbin, Dodd, Rains, Frank and Obama's other Chicago THUGS be driven out of office and out of this country.

    It is just about time for all GOOD Americans to TAKE BACK OUR COUNTRY from these Communists!!!!!!!


    February 20, 2009 03:52 pm at 3:52 pm |
  23. Justin from New Haven, CT

    If I stay in CT next year, I am definitely voting Green or independent for Senate. Dodd's last term has been atrocious. I used to like him a lot, but I lost a lot of respect for him.

    February 20, 2009 03:52 pm at 3:52 pm |
  24. yuri

    The term "nationalization" is, sure as heck, likely to reignite the already simmering, seething, and submerged fury of the GOPs, who are constantly seeking a pretext to jump into the foray with the Dems. Neocons will further fuel the fiery feud, fulfilling their own fondness for fighting. Watch out, Dems! A boisterous battle may ensue.

    February 20, 2009 03:53 pm at 3:53 pm |
  25. Deborah, Detroit

    Socialism was the term the repugs used during the campaign. The REPUGS are now talking about nationalizing the banks. Rush and Sean will rename it a tax cut so the repugs can deny socialism.

    February 20, 2009 03:57 pm at 3:57 pm |
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