Dear Professor Roubini

I have the greatest respect for your prescience and foreknowledge about the current financial market crisis. I respectfully suggest, however, that your latest Twitter post about your interview with Maria Bartiromo (hereafter referred to on this blog with the greatest respect as "Maria") misses a very important point about the nationalization of the large banks in the United States.

I refer you to Gerald P. O'Driscoll's recent column in the WSJ. As Jerry points out, there are two flavors of nationalization. The FDIC has practiced one flavor for a long time, with respectable effect. In that flavor, the FDIC closes down insolvent institutions, sells off the pieces that they can and the taxpayer is on the hook for the rest. The operative words here are "closes down."

The other flavor of nationalization, which is the one you confuse, is to somehow allow these institutions to continue to operate so that at some later time they can be "sold back" to the private sector.

There are many problems with this approach, but I will mention only one.

THE SALE BACK TO THE PRIVATE SECTOR WOULD NEVER HAPPEN!

Do you honestly think that if Barney Frank and Christopher Dodd were to get their hands on a bank that is backed by the full faith and credit of the United States, that they will ever let it go?

Not in a million years.

As Jerry O'Driscoll points out, "nationalized" banks would be quickly politicized.

In fairness, I believe that you think there is some happy median between shutting down the largest financial institutions in the US and having them operate under political control.

I respectfully submit that you are mistaken.