To the Editor:

The Viewpoint "Resist the Temptation to Nationalize Banks" [Feb. 20] is misguided in two respects.

First, it alleges vulture investors will be enriched, apparently unjustly, by a systematic mispricing of assets. Profits, or at least the possibility of profits appropriate for their risk, are needed to attract private investors. The assets involved are opaque, difficult to value, and risky. Unjust profits are by no means assured.

Next, it asserts assets held by originating banks are more valuable than they would be if held by private investors. Asset values are independent of the status of their holder. Banks got into their current problems by using government subsidized deposits to make mispriced risk investment decisions.

Bank nationalization is not the preferred action. Nonetheless, the only thing worse than bank nationalization is the creeping nationalization of bank liabilities taking place under current rescue efforts.Joseph V. Rizzi
Senior investment strategist
CapGen Financial Group, New York

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