Brazilian FM: U.S. should nationalize banks

Special Report:Global Financial Crisis

RIO DE JANEIRO, March 16 (Chinese media) -- The U.S. government should nationalize its banks in trouble, Brazil's Finance Minister Guido Mantega said on Monday, considering it will be better than only buying the banks' bad assets, local media reported.

"They have no other way out," said Mantega in New York City, where he is taking part in business seminars.

The United States does not feel comfortable with the idea of nationalization due to "ideological reasons," but it would bring more security to the taxpayers, the minister said, noting that it would be a preferable option compared with only buying the bank's bad assets.

"If you pay too much for the bad parts, the taxpayers complain in court. If you pay too little, the banks break," he said.

Otherwise, the Minister said Brazil and the United States have already agreed on several subjects that will be discussed in the upcoming G-20 meeting due in early April in London, such as fiscal policies, governmental investments and basic interest rates cut.

Brazil is in a relatively good position to weather the impacts of the current global financial crisis, Mantega said, "Our fiscal capacity is larger, because we saved beforehand."

Only China is in better conditions to leave the crisis behind, he said, "The Chinese have two trillion U.S. dollars in foreign exchange reserves, and banks have not gone bankrupt. They can be aggressive in the credit distribution, stimulate the domestic market and investments."

To overcome the crisis, Mantega offered his support to tougher regulations to the international financial institutions, but said he doubts about creating an organization described as "the banks' WTO," an idea proposed by EU countries such as France and Germany.

The idea is good, as long as the new organization is not structured like the International Monetary Fund (IMF), the minister said.