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Well Peter -- regulators are conducting stress tests we've been talking about this a lot on the nineteen largest banks in the country.
What will the results of those tests in Baptist a couple of weeks.
What is some banks are found to be in bad shape -- need more government help.
Could the -- word nationalization.
Be an option joining us now Doug Elliott was a fellow with the Brookings Institution.
And if nationalization becomes an option he's actually got a plan.
Have a break even he -- that's because nobody want to nationalization I think but let's talk about first the -- fifteen steps.
Before we get into it let's show the first five and as we show them.
-- coherent criteria.
Number to determine which large banks meet criteria.
Number three -- went to act for in short funds are available to fill a hole.
And five decide how to allocate the -- is there another ten steps but let me talk to you first about the first five.
And the possibility urgency should be emergency only.
Absolutely and I would want to emphasize that I put together this.
Paper to talk about what you have to do if you really work and -- nationalize a major bank.
Because we might end up doing it but it's not something I advocate.
We should only do it if we really do find things deteriorate so much that it's just the last resort.
The sixth step to me is perhaps the one that that matters most to me and that is have an exit strategy if the government's going in.
Quick surgical and then get out so this entity can either -- -- fall on its own but why do we need this.
Well we need to come up with the exit strategy for all the reasons you said but the problem is it will not be quick.
Much as everyone would want it to be the last big nationalization we did was continental Illinois in 1980.
We didn't fully get out of there for seven years.
Despite the fact it was a bull market and we didn't have an overhang of a lot of other banks that we had to try to sell.
-- looking at the last five steps.
Talking about instituting good bank bad bank structure as the tent stepped.
That is somewhat what the government has tried to talk quite a bit about as it pertains to companies that are in big trouble banks that are in trouble now.
Are we getting are we developing any headway with what we're trying to do out of Washington to help banks.
Well we're not really in a position right now to do -- good bank bad bank because that requires a lot of money and congress hasn't authorized nearly enough to do that.
So that's why we're doing this public private partnership instead it's a way of bringing in money from investors.
And other sources in order to not use up so much of the TARP money.
But once you've -- taken the step of nationalized in the bank at that point it's your bank.
So you guys will do whatever the most sensible thing is to manage it as best you can.
Should we be as careful as we are about nationalization I was trying to -- -- a back -- when everybody's going in the front everybody's going -- the fronting nationalization is a horrible thing.
Are there certain positives to nationalization.
Look every solution to this financial crisis is a bad solution.
We're just kind of pick the least -- believes it -- you have.
They get the least worst exactly if you had one of the really large banks.
They got into dire straits it would be better to take it over then to have it just fall apart day after day after day.
I think despite.
The troubles that some of these banks have I don't think we're at that point yet and I'm hopeful we won't get to that point.
Me -- Doug Elliott of the Brookings Institution he's a fellow there thank you for outlining the fifteen steps.
Of the emergency plan we hope won't be enacted but thank you very.
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