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 Posted: Sun Nov 01, 2009 8:01 am |
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very strange situation today in America where we have given banks
hundreds of billions of dollars and the president has to beg the banks
to lend and they refuse, the recession is nowhere near its end, rising
unemployment, weak demand
http://www.bloomberg.com/apps/news?pid=20601087&sid=a1GMxUFBOhrY&pos=5
Stiglitz Says U.S. Is Paying for Failure to Nationalize Banks
By Bloomberg News
Nov. 1 (Bloomberg) -- Nobel Prize-winning economist Joseph Stiglitz
said the world’s biggest economy is suffering because of the U.S.
government’s failure to nationalize banks during the financial crisis.
“It we had done the right thing, we would be able to have more
influence over the banks,” Stiglitz told reporters at an economic
conference in Shanghai yesterday. “They would be lending and the
economy would be stronger.”
Stiglitz has stuck with his view even after the U.S. economy returned
to growth in the third quarter and as banks’ share prices climbed this
year. President Barack Obama said on Oct. 24 that the nation’s
lenders, supported by taxpayers in the crisis, need to “fulfill their
responsibility” by lending to small businesses still struggling to get
credit.
Companies such as Citigroup Inc. and Bank of America Corp. benefited
from a $700 billion taxpayer-funded bailout package last year. In
contrast, Obama said that too many small businesses are still short of
money, adding that his administration will “take every appropriate
step” to encourage banks to lend.
“We have this very strange situation today in America where we have
given banks hundreds of billions of dollars and the president has to
beg the banks to lend and they refuse,” Stiglitz said yesterday. “What
we did was the wrong thing. It has weakened the economy and has
increased our deficit, making it more difficult for the future.”
While the U.S. economy grew at a 3.5 percent annual rate in the third
quarter, the first expansion in more than a year, the economist said
the recession is “nowhere near” its end, citing rising unemployment
and weak demand.
The U.S. government plans to alter the way that a similar rescue would
be handled in the future. Draft legislation proposes that banks, hedge
funds and other financial firms holding more than $10 billion in
assets would pay to rescue companies whose collapse would shake the
financial system.
Citigroup and Bank of America shares have quadrupled from this year’s
lows in March.
To contact the reporter on this story: Judy Chen in Shanghai at
xchen45 at (no spam) bloomberg.net
Last Updated: November 1, 2009 02:33 EST |
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