I mean, Dean Baker they can dismiss as some far leftist loon, but Nouriel Roubini gets airtime. They've got to listen now, right?

Nationalizing insolvent US banks is the best solution to avoid a Japan-like scenario in which 'zombie' financial institutions would eat up public resources while the US economy would teeter on the brink of depression, Nouriel Roubini, economics professor NYU and chairman at RGE Monitor told CNBC Tuesday.

Bank shares have fallen on news of abysmal losses and on fears that governments across the world would step in and wipe shareholders out, dragging global stock markets down, but temporary takeover by the state of the sick institutions will insure the survival of the system, Roubini said.

"The market friendly solution is temporary nationalization," Roubini told "Worldwide Exchange".

"Doing something surgical and radical actually may improve the market sentiment," he said. "If we don't do it, we risk ending up like Japan, that had zombie banks for a decade," he added.

Furious banking consolidation that took place in the years preceding the crisis has made matters worse, as it had created banks that were too big to fail but also too big to save, according to Roubini.

The US government has already provided between $7 trillion and $9 trillion in explicit or implicit support for banks, and taxpayers would actually benefit from nationalization, as they wouldn't have to bail out shareholders as well, he said.

"If you don't nationalize them on a temporary basis the fiscal commitments will be bigger," Roubini said. "The alternative is actually a dangerous debt spiral. We risk ending up in a near depression for the US and the global economy if we don't take this radical action as necessary."

Taxpayers could even make a small profit when the nationalized banks will be privatized again, he said.

And they'd better hurry the hell up with the nationalization because i'm getting a little tired of reading about banks that showed up to get a handout and then went and spent money on some lavish event.

A bank that received $1.6 billion dollars of the government's bailout money sponsored what reports are calling a lavish series of events in Los Angeles, California, last weekend.

Northern Trust, based in Chicago, Illinois, spent an undisclosed amount of money sponsoring a Professional Golf Association tournament and associated client events, including concerts, dinners and parties, according to celebrity Web site TMZ.com.

The bank spent millions of dollars on the event, which included -- on top of the sponsorship costs of the Northern Trust Open tournament -- concerts by Sheryl Crow and Earth Wind & Fire, a private party at music venue House of Blues and gift bags from Tiffany & Co., the Web site said.

According to TMZ.com's report, employees and clients attending the tournament dined on seared salmon and petite Angus filet and stayed at some of Los Angeles' most elegant and expensive hotels.

Doug Holt, senior vice president of communication for Northern Trust, confirmed to CNN that his bank sponsored the tournament and its events but, he said, not at taxpayer expense.

Holt told CNN that as a "healthy" bank, Northern Trust did not seek the $1.6 billion it received from the government as part of the U.S. Treasury's Capital Purchase Program, but that it "agreed to the government's goal of gaining the participation of all major banks in the United States."

"This is the second year Northern Trust is sponsoring the Open as part of a five-year contract," Holt said. The contract was signed in 2007, before the government's Capital Purchase Program to aid banks came into existence.

Holt also said that the sponsorship is an "integral part of Northern Trust's global marketing activities," and as with all marketing, advertising, corporate sponsorship or charitable activities, no taxpayer money was used to fund the weekend events.

...
Northern Trust announced it was laying off 450 employees in December of last year, with the bank saying the move was part of a number of actions "to better position the company for improved profitability and continued global growth during these difficult economic conditions."

So there are a few things wrong here.

1. "We didn't need the money. The government just insisted on us taking it, and we didn't want to make them feel bad.


2. "We always do stuff like this. It's how we do business."


3. "None of that bailout money was used."


4. "Business is bad so we are going to have to layoff some people to save some money."

I really hope the government does force the bank to do what Barney Frank threatened (but i'm not holding my breath).

Rep. Barney Frank, D-Massachusetts, the House Financial Services Committee chairman, is writing a letter to Northern Trust asking the bank to pay back the money it spent, according to Frank's spokesman.

"We are asking Northern Trust to repay the government the equivalent of the funds they spent on the tournament and related events," Steve Adamske of Frank's staff told CNN.