Nationalize Some Banks: Greenspan

Ex-Fed head abandons free-market purism, wants temporary move
By Jason Farago,  Newser Staff
Posted Feb 18, 2009 8:06 AM CST
Nationalize Some Banks: Greenspan
Alan Greenspan, former chairman of the Federal Reserve speaks at the Economic Club of New York meeting on Tuesday, Feb. 17, 2009 in New York.   (AP Photo/Jin Lee)

Alan Greenspan, once famed for his light touch, now says the US may have to temporarily nationalize some banks. The former Fed chairman said in an interview with the Financial Times that some institutions need government ownership to restore liquidity and help shore up the larger financial system. "In some cases, the least bad solution is for the government to take temporary control," he said.

"I understand that once in a hundred years this is what you do," said Greenspan, whose laissez-faire approach to regulation has drawn withering criticism as the crisis has unfolded. Sen. Lindsay Graham has also changed his tune: The South Carolina senator said "focusing on what works" should trump ideology, adding, "We cannot keep pouring good money after bad. If nationalization is what works, then we should do it." (More Alan Greenspan stories.)

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