Pete Davis explains why nationalization is a bad idea. McArdle summarizes his first point:

No US institution currently has the legal authority to take over a multinational financial conglomerate.  Banks are relatively simple operations, and the FDIC has extensive experience in resolution of a liquidation.  But banking and insurance and stockbroking and securities underwriting and capital markets trading all piled into one institution are vastly more complicated--there is, after all, a reason why each of these businesses have different regulators.  The argument for breaking banks into commercial and investment banking doesn't seem to have made much sense from an economic standpoint, but it may have made sense from a regulatory standpoint.  At least in the US, no regulator had the expertise to oversee these giant companies.

Why is it the fact that the government has no legal authority to take over these massive banking enterprises all but absent from the current debate? Isn't it, er, a little bit relevant?

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