The nationalization option

The economist Brad DeLong advocates the nationalization path on his blog (via TPM):

It might work like this. Congress:

• grants the Federal Reserve Board the power to take any financial firm whatsoever with liabilities and capital of more than $25 billion that is not well capitalized into conservatorship
  
• requires the Federal Reserve Board to liquidate any financial firm in its conservatorship when it judges that the firm is insolvent (paying off in full or not paying off in full the liabilities of the firm at its discretion), unless
  
• the Federal Reserve Board finds that preservation as a going concern is in the interest of the taxpayer, in which case Congress
  
• grants the Federal Reserve Board the power to transform equity stakes in the firm into junior preferred stock at par value and then transfer ownership and custody of the firm to the Treasury
  
• requires the Federal Reserve to terminate conservatorship if the firm becomes well-capitalized once again.
  

In addition, Congress:

• grants the Treasury the power to issue up to $500 billion of troubled asset redemption bonds, the proceeds of which are then to be loaned to the Federal Reserve to be used to cover the liabilities of those liquidated firms that the Federal Reserve judges it is in the interest of the taxpayer to have their liabilities paid off in full.
  

With all thanks due to market fundamentalist prejudice, deeply entrenched business interests and the lack of a nationally viable opposition party, the nationalization option seems to be quixotic. It is unlikely to come up for discussion.