Schumer for Nationalizing Banks ‘Zombie’ Banks

Sen. Chuck Schumer (D-N.Y.) told the Huffington Post Friday that he would support nationalizing the country’s “zombie banks.”

“It should be the last arrow in the quiver,” he told the Post of nationalization. “The danger here is when a government takes [a bank] over, it drives down shares of other banks that might not be in as bad shape,” he said. “Let me be clear about this because I want to be very careful: I am not speaking of any specific institution, just a general comment about a general situation. And I don’t have — and please write this — I don’t have any specific institution in mind.”

Schumer said he wouldn’t support the government taking over banks for an extended period of time. But of banks that are in great peril, Schumer said: “The government should come in. And what the government would do would be: wipe out the shareholders, put in new management — wipe out the old management and put in new management — and then let the bank run sort of independently without day-to-day government intervention.”

Schumer said the government should only control the bank for a short period of time and that the size of the bank doesn’t matter.

Earlier today, Sen. Chris Dodd (D-Conn.), the chairman of the Senate Banking Committee, told Bloomberg that he also may support nationalization and GOP Sen. Lindsey Graham has said repeatedly he would support it.