Ross: Nationalizing Banks Is a Slippery Slope

Nationalizing banks is a slippery slope which won’t do the mired down economy any good, says Wilbur Ross, chairman and CEO of WL Ross & Co.

Ross told CNBC on Wednesday that while beneficial ownership of financial institutions is appropriate for governments, being in charge of banks is not. His reason? America is becoming too dependent on government loans, which puts the Federal Deposit Insurance Corporation (FDIC) at risk.

“Now if you also make the big commercial banks government-owned, it will be that the government is the only place where you can get a loan and if you nationalize a few government banks, why would a big depositor deposit his money anywhere but a government bank? Remember we have a limit on the FDIC insurance and it’s not a huge limit.”

Ross is also not convinced that governments should have complete control over banks because it means business and politics have to be mixed, and this is never a good idea.

Giving the example of the multi-billion dollar government bailout of Citigroup, Ross says government control of the financial institution hinders its business activity overseas.

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