This refers to Nouriel Roubini’s ‘Time to nationalise insolvent banks’, February 18. He is right that the moral hazard of bailing out banks will be addressed by nationalising them. The problem, however, occurs after that. Roubini points out that if the government goes in for a good-bank-bad-bank model — India tried a good-UTI and a bad-UTI solution many years ago — it will have to manage all the bad assets and it does not have the expertise to do this. He’s right. But how does nationalising the banks create the managerial capability? At the end of the day, Roubini is reflecting the justified anger against the former ‘Masters of the Universe’, but he has no solution either.
Ajay Sinha, Mumbai
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