The New York Times reported on March 3 that the AFL-CIO's “executive council will call on the Obama administration on Wednesday to speed the nationalization of problem banks to stimulate lending and lift the sagging economy,” and that "[t]he labor federation, a lobbying powerhouse that represents 10 million workers, will thus become one of the first groups -- and certainly the most powerful -- to call for moving more aggressively on nationalization, both to counter Republican and business cries against it and to press the Obama administration not to vacillate over such a move." The Times also reported, “Labor leaders said the administration appeared to be vacillating on nationalization partly out of fear of Republican attacks that it was adopting socialist policies.” But in portraying the nationalization of troubled banks as a partisan issue, the Times ignored Sen. Lindsey Graham's (R-SC) statement that “nationalizing the banks” is an option that should be considered.

During the February 15 edition of ABC's This Week, Graham stated, “This idea of nationalizing banks is not comfortable, but I think we have gotten so many toxic assets spread throughout the banking and financial community throughout the world that we're going to have to do something that no one ever envisioned a year ago, no one likes, but, to me, banking and housing are the root cause of this problem.” After host George Stephanopoulos asked, “So what would you do now?” Graham responded, “I would not take off the idea of nationalizing the banks.”

A February 18 Reuters article, headlined “Even Republicans may back U.S. bank nationalization,” further reported, “Republican Senator Lindsey Graham, who is close to losing presidential candidate Senator John McCain, told Reuters on Wednesday nationalization is an option for dealing with troubled U.S. banks if they fail [Treasury Secretary Timothy] Geithner's 'stress test.' ” Reuters also reported that “Alan Greenspan may have given Republicans the political cover they need to consider nationalizing U.S. banks when the former Federal Reserve chairman joined a growing list of experts who suggest nationalization is inevitable.”

From the March 3 New York Times article:

The A.F.L.-C.I.O.'s executive council will call on the Obama administration on Wednesday to speed the nationalization of problem banks to stimulate lending and lift the sagging economy.

The labor federation, a lobbying powerhouse that represents 10 million workers, will thus become one of the first groups -- and certainly the most powerful -- to call for moving more aggressively on nationalization, both to counter Republican and business cries against it and to press the Obama administration not to vacillate over such a move.

A.F.L.-C.I.O. officials asserted that the administration's practice of giving billions of dollars in dribs and drabs to distressed banks had failed to restore their solvency, leaving them as zombie banks that largely refrain from lending, thereby contributing to the economy's decline.

The executive council is scheduled to approve a statement that criticizes the Obama administration for indulging shareholders of distressed banks by not nationalizing the banks to speed the cleanup of their balance sheets.

“We believe the debate over nationalization is delaying the inevitable bank restructuring, which is something our economy cannot afford,” a draft of the council's statement said.

The labor leaders also asserted that the Obama administration, like the Bush administration, had failed to obtain fair value for the tens of billions it had invested in distressed banks.

“By feeding the banks public money in fits and starts, and asking little or nothing in the way of sacrifice, we are going down the path Japan took in the 1990s -- a path that leads to 'zombie banks' and long-term economic stagnation,” the draft statement said.

The statement makes clear that the group wants to add its political and lobbying muscle to calls by Joseph E. Stiglitz, Nouriel Roubini and other economists in favor of nationalization.

Labor leaders said the administration appeared to be vacillating on nationalization partly out of fear of Republican attacks that it was adopting socialist policies.

From the February 18 Reuters article:

In a sign of how deeply the financial crisis has transformed America, Republicans who embrace the sanctity of free markets are supporting some form of a U.S. government takeover of increasingly insolvent banks.

Alan Greenspan may have given Republicans the political cover they need to consider nationalizing U.S. banks when the former Federal Reserve chairman joined a growing list of experts who suggest nationalization is inevitable.

[...]

Experts say a meaningful bank nationalization -- one that would involve the federal government taking a majority stake in hundreds of banks -- would cost more than the $350 billion available to Obama under the second half of the Troubled Asset Relief Program (TARP).

On top of that, the United States is considering expensive bailouts of the auto industry ($39 billion) and the housing market ($275 billion) at a time when the Republican minority is howling about the cost to taxpayers.

Republican Senator Lindsey Graham, who is close to losing presidential candidate Senator John McCain, told Reuters on Wednesday nationalization is an option for dealing with troubled U.S. banks if they fail Geithner's “stress test.”

From the February 15 edition of ABC's This Week with George Stephanopoulos:

GRAHAM: This idea of nationalizing banks is not comfortable, but I think we have gotten so many toxic assets spread throughout the banking and financial community throughout the world that we're going to have to do something that no one ever envisioned a year ago, no one likes, but, to me, banking and housing are the root cause of this problem. And I'm very much afraid that any program to salvage the bank is going to require --

STEPHANOPOULOS: So what would you do now?

GRAHAM: -- the government to get -- I would not take off the idea of nationalizing the banks.