US may partly nationalize banks

Okay, this is just scary. Perhaps necessary (I'm going to wait for Chris in Paris to wake up and give us his two cents (now only worth 1.5), but on its face, we're talking about nationalizing banks. What did the hell did the Republicans do to our country? And John McCain doesn't want to talk about the economy. I guess if you have 12 homes you have that luxury. From the NYT:

WASHINGTON — Having tried without success to unlock frozen credit markets, the Treasury Department is considering taking ownership stakes in many United States banks to try to restore confidence in the financial system, according to government officials.

Treasury officials say the just-passed $700 billion bailout bill gives them the authority to inject cash directly into banks that request it. Such a move would quickly strengthen banks’ balance sheets and, officials hope, persuade them to resume lending. In return, the law gives the Treasury the right to take ownership positions in banks, including healthy ones.

UPDATE FROM ROB: Just a couple of hours ago this article was on CNBC debating whether this move was nationalization or not. The article does a good job of explaining the precarious position we're in.

“We are in the midst of an raging international credit meltdown and we do not have the luxury of waiting for (the bailout fund) to be implemented,” argues Robert Johnson, a former managing director of Bankers Trust and Soros Fund Management executive. “Treasury needs to inject $500 billion of capital as soon as possible into at least the large 19 primary dealer banks and probably some large regional banks as well.”

The direct recapitalization of ailing banks is “high-impact” money versus the “low-impact” approach that Treasury is pursuing through the bailout fund.

The article does a good job of describing the end of free market capitalism in the United States.