And in a way, the big banks are effectively nationalized in the U.S. We do maintain parallel governance structures because fully nationalized banks ( like the Bank of England in Britain's Mercantilist heyday ) are ... well, mercantilist.
Is this supposed to be a figure of speech suggesting Canadian banks policies are so similar they are essentially the same bank? The three largest of the Big Five (RBC, TD and Scotia) are so similar in size none of them can even be said to lead the market.
Thank you for the correction, Joel.
The pertinent EconTalk is here: http://www.econtalk.org/archives/2014/02/calomiris_and_h.htm...
Just, you know, the taxpayers are not the owners, because .
Hm, maybe it doesnt really matter if taxpayers would have become the owners, because in any case they would have payed for their losses but the profits would not magically find their way into taxpayers pockets, instead it would be some new term instead of owners like "facilitators" "workers".
In the end, money doesnt really matter, what matters is which people take decisions concerning all other people, power.
For starters, the government can go to the banks shareholders and tell their shares are going to be worth $X or they won't put money in and the business will go bankrupt.
If the shareholders manage to find another investor, then great.
In the UK, this happened with e.g. Royal Bank of Scotland, where the government gradually acquired a larger proportion of the bank as it provided capital until it owned the vast majority (in 2012 it owned about 82% - I don't know what it stands at now). While nationalisation of RBS was certainly not cheap in terms of pounds, it was firesale prices in terms of the size and turnover of the business, because the government took on massive risk as well.
But the key part is that by providing the cash infusion in return for shares, the government is also participating in the upside if they manage to turn the bank around, and shareholders took a substantial hit in the form of massive dilution (though they are set to recover quite a bit as the bank recovers).
The problem is, that currently nationalization is only possible in most countries, if you fully pay the owner. Changing this would in some countries require constitutional changes. I think having a special rule for banks and the option to split would be a feasible change.