Of course Chase has plenty of capital... they have been the single biggest recipient of taxpayer largesse! GOD! THE AUDACITY!

"Last night, the federal government pumped a $1 billion into the ailing institutions."

I hadn't heard of this until now. Not a good sign. Thanks for informing me of this.

More here:

http://www.washingtonpost.com/wp-dyn/content/article/2009/01/28/AR2009012803242.html?nav=rss_business/industries

Commonwealth Ed is the local electrical generating utility here in Chicagoland, the biggest in Illinois. They are regulated by the state of Illinois. A couple years ago they were crying poverty over rising costs and wanted price hikes citing earnings of only a few million on hundreds of millions in revenue. Dire predictions of service brownouts, strained reactors, crumbling infrastructure, California 2001 here we come, etc.

In the meantime they were funneling almost all their revenue to Exelon, their parent company, partner, and banker which was fat and happy, billions in the black.

Utilities are fine as long as they are strictly regulated and aren't allowed to run shell games on the public.

So Cooper is the TPM equivalent of "the frigging balance" of the frigging msm ?

Many countries have nationalized banks and are doing well, thank you.

Well Matt, if you would study up on the divergent paths taken by Japan and Sweden back in the 1990s, you would come to realize that NOT nationalizing the banks is probably our worst choice.
Check it out - google it and get back to us.

Liquidate the CEOS!
Liquidate the shareholders!
Liquidate the bondholders!
Clean the rot!

Seriously, the problem here is the moral hazard. In a pure capitalist system, the shareholders and bondholders would be wiped out and the CEOs could be sued for their mistakes. But instead we are forking over billions, trillions oven to these bonus hungry idiots so they can continue to act as parasites on productive labor soaking money from the market and returning nothing Why on earth should we continue with this system?

Of course "nationalization" is a "distracting term." It's driving the banksters to distraction because it would mean the end of their taxpayer-financed gravy train.

By contrast with Cooper's obvious economic ignorance, Barry Ritholtz suggests the following:

1. Stop interfering with the Markets! Nationalizing banks isn’t market interference, keeping these mortally wounded banks alive is! Stop pussyfooting around and admit the truth. The market knows it, investors know it.

Let the FDIC do its job. That is:

2. Temporarily Nationalize the Banks We know they are insolvent, and cannot survive without taxpayer money. Spending 150% of their market cap for an 8% share is absurd.

Wipe out the debt, liquidate bad common holders, fire the Board and management, appoint new competent, risk sensitive management. They have 6 months to spin out a 10% stake in each of their holdings, followed by the rest within 5 years (10 at most);

3. Taxpayer owned: Once nationalized, that 10% spin out of the components parts would be in the form of preferred to taxpayers! For BAC, you would spin out Bank of America, Merrill Lynch, Countrywide, plus the “B/A Toxic Holdings I & II” For Citi, it would be Travelers, Citi, Smith Barney, Citi Toxic 1 & 2, etc. [corrected in comments: Citi doesn’t own Travelers and Smith Barney is now part of a partnership with Morgan Stanley.]

4. Now Recapitalize: With the toxic waste off of the books, you can easily recapitalize the banks. Give the old creditors a “sweetheart” deal — they get a 10% stake also, but only if they buy a matching amount in the new bank.

5. Align Compensation with Long Term Profitability: Stop rewarding traders for short term gains despite long term losses. Stop paying taxpayer monies out as dividends. Bonuses must be a function of the long term health of the company — not monthly volatility.

I'm with Neal.
Wondering whether or not to regulate the banks as harshly as utilities has nothing to do with the nationalization question.

First there is the immediate question of who has to bear the USD 1.8 trillion expected losses on bad loans and toxic securities. It can be entirely 'socialised' by bailing out the shareholders and creditors, letting the tax-payer bear the entire burden. Or the losses can be partially 'privatized' where shareholders get wiped out and creditors take a haircut while the tax-payer bears the remaining losses. This latter option is what we call capitalism! The FDIC seizes banks when they are insolvent and liquidate them. It involves a phase where there is government management of the assets being liquidated, so thereby a form of temporary nationalization. But you have to be somewhat retarded to worry whether this is fundamentally unAmerican.

Second there is the longer-term question of the kind of regulation that should be imposed on the banks. You can worry with Mr. Cooper about what label we should put on their ultimate status. But it is stupid and uninteresting. It is not even a question of the quantity of regulation (heavy or light), but rather a question of the quality of regulation: what kind of criteria are used to evaluative the risk position of a bank (eg. the role of capital requirements and rating agencies, considerations of systemic risk, VaR models, etc).

Noone is proposing that the banks become permanent government owned providers of credit services. Who exactly is Matt Cooper having a debate with?!

All this just to beg someone to get Mr Cooper to write about something he is vaguely familiar with.

I just checked with my local credit union and apparently 20% of their money is invested in the corporate credit union with 80% invested with their members. They are also audited on the state level.

I am very happy that their 20% investment has been guaranteed by the feds. And I know they will be challenged by foreclosures that can't be helped as folks lose jobs and incomes.

So, thank you to the feds! It is becoming increasingly apparent that we'll either be nationalizing our financial sector or heavily regulating it. I don't see much of a GD difference between the two.

I now understand my depression-era grandparents who spent the decades after the depression detesting a lot of things--banks, the GOP, and Wall Street.