Never have I seen an idea move so quickly from the fringe to the mainstream. While three months ago only a few people were even discussing the possibility of nationalizing some of the failed banks, it is now getting serious coverage. Some Republican lawmakers and publications like the Economist and Newsweek have started to openly talk about the possibility.
The fact that at least a few of the worst banks will be nationalized now seems inevitable. Already some banks have received more TARP money than they are now worth. President Obama has even acknowledged that Sweden's nationalization of their banks in the 90's is so far the best model for how to deal with the problem.
It seems that the greatest obstacle to nationalizing the banks is the term nationalization. For decades, the right has turned both socialism and nationalization into four letter words in American politics. This means that Obama's most important objective in dealing with bank crisis is to invent a new name for nationalization. Below is a list of my favorites. Do not be surprised to see one of these names (or something similar) picked up by the White House in the coming weeks:
Temporary FDIC Directorship
Temporary FDIC Management
FDIC Directed Reorganization
Directed Management Reorganization