Doug Holtz-Eakin Calls for Bank Nationalization

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I wonder if Doug Holtz-Eakin has talked to John McCain about this idea. I bet he could do more good for the world talking it up than wasting his time with inane Twitters. At any rate, I think DHE is making sense:

The right thing to do is to apply the principles of responsibility and competition, and the lessons of history to get this right. The most important lesson is that failed, insolvent banks cannot be permitted to continue to operate using taxpayers’ subsidies. Letting these “zombies” walk the financial system was at the heart of the savings and loan crisis and the slow Japanese recovery from its financial crisis. These institutions should be taken over, their management and shareholders suffer the consequences of their failure, and the assets re-sold to private sector entities as fast as is feasible. That’s good policy: discipline failure, promote real competition, and use assets effectively in the private sector.

This, of course, is the nationalization option promoted by Paul Krugman, Simon Johnson, and unwashed bloggers like yours truly.