Do banks need nationalization?

First, it’s becoming clearer all the time that outgoing Treasury Secretary Henry Paulson opposed the idea on principle and wasn’t just tacking with the political winds three months ago.

It’s also becoming clearer that Federal Reserve Chairman Ben Bernanke believes that if nationalization is what’s needed, it’s what’s needed.

Question: How much of that do we already have?

“What we have is a weird, shadow nationalization,” said Karen Shaw Petrou, managing partner at Federal Financial Analytics, a consulting firm in Washington. “The government does not want to and should not want to own banks. But if they get forced into that situation, they should resolve that situation. Here, what you have is a huge diversified financial services industry with recognized losses and looming losses in every aspect of its operations. There’s nothing straightforward about it.”

Although the NYT doesn’t mention his name, it’s clear Treasury Secretary-designee Tim Geithner will be Johnny-on-the-spot, should he be confirmed. Given his ties to Paulson, lets’ hope that not just Charles Grassley, but a lot of senators, ask Geithner bailout-nationalization question (while not ignoring back taxes questions, either).

And, that the questions be specific, and into all the different diversified aspects.