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DANCING….Joe Nocera writes today that the original idea behind TARP was right all along: the government needs to buy up toxic assets from distressed banks if we want to get the banking system working again. This idea has gained so much currency in so much of the financial community, he says, “It’s pretty much unanimous.”

But then, a thousand words into his piece, he suddenly says that the S&L crisis of the 80s is the right model to emulate:

The S.& L.’s were — no question about it — nationalized. The bad assets were stripped out, and handed over to the Resolution Trust Corporation, which was charged with selling them off….What is particularly appealing about an R.T.C.-type approach is that the government doesn’t have to value the assets right away, which has always been the sticking point with the toxic assets on the banks’ books. It can simply take control of them, and then figure out ways to sell them off over time….But to carry out this kind of program, the government has to be in control of insolvent banks. This also has to be faced squarely.

What a bait and switch! This isn’t TARP. This is Swedish-style nationalization. Nocera just wants to erect a massive rhetorical edifice around the idea to make it sound like that’s only a minor side effect.

Come on, Joe. If the defining characteristic of all the good plans for dealing with the banking crisis is, as you say, that “they don’t dance around the issue,” then don’t dance. The headline on your column shouldn’t have been, “First Bailout Formula Had It Right.” It should have been, “Time to Nationalize.”

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