Bank Nationalization Fears

Описание: "Fears for BofA and Citi rattle markets"

By Francesco Guerrera, Aline van Duyn and Alistair Gray in New York

Published: February 20 2009 10:20 | Last updated: February 20 2009 21:45

Fears that Citigroup and Bank of America would be nationalised shook global markets on Friday, sending shares in the financial sector tumbling.

Citi fell 22.3 per cent to $1.95, bringing its losses this week to nearly 47 per cent and reducing its market value to $10.5bn. Bank of America fell another 3.6 per cent to $3.79, giving it a loss of 33.6 per cent this week. At one point during the day, BofA was down more than 35 per cent.

The S&P 500 dropped 1.14 per cent, paring earlier losses after the Obama administration sought to downplay talk of bank nationalisations by stressing its commitment to private ownership while stopping short of ruling it out altogether.

This administration continues to strongly believe that a privately held banking system is the correct way to go, ensuring that they are regulated sufficiently by this government, said Robert Gibbs, White House press secretary. Thats been our belief for quite some time, and we continue to have that. Chris Dodd, chairman of the Senate banking committee, earlier stirred speculation about nationalisations by telling Bloomberg television: Im concerned that we may end up having to do that [nationalisation], at least for a short time.

Wall Street executives told the Financial Times that the US government would begin its stress tests of banks financial health as early as next week. This could expose further need for capital.

Citi and BofA have been pressing regulators and officials to explicitly rule out nationalisation.

As reported in Fridays FT, Citi has floated a plan allowing it to raise more capital without being nationalised through a conversion of about $75bn of preferred shares held by the government and other investors. But people close to Citi said the Treasury had so far failed to engage in concrete discussions.

Stock markets

Miners take London shares to year low

European shares touch five-year low

Euro at three-month dollar low

The flight to safety in the markets was global, which helped push gold prices beyond $1,000 a troy ounce during the day. It is all fear-driven of one kind or another, said Jay Mueller, senior portfolio manager at Wells Capital Management.

Additional reporting by Saskia Scholtes in New York and Andrew Ward in Washington.

Copyright The Financial Times Limited 2009
Source Financial Times. FT.com
http://www.ft.com/cms/s/0/f9e409ce-ff...


Another associated link
1.http://www.ft.com/cms/s/0/0e569820-ff...

It seems that Obama is following in the footsteps of the National Socialist movement that eventually gave rise to NSDAP, this is not a good sign of anything, this promised "Change" is certainly for the worst. Obam's mantra should not be "Change", instead it should be something in the likes of "alles für nationalsocialism".

For those overseas, Obama has a cult like following in the U.S., similar to other demagogue (Most notably one with a very short mustache just below his nasal cavity). Some people in the U.S. are no longer paying for their mortgages in the belief that Obama will wipe away their mortgage along with their tears.

Anyhow, the usual cycle now in the U.S. is after the markets close on friday (eastern time) a few hours later the federal reserve will shutdown a few bankrupt banks and absorb their losses, but will normally announce it on either saturday or sunday. If anything is to occur, it will occur after the markets have closed. I doubt BOA or Citibank will be nationalized anytime soon, but more then likely the acclimation is getting shareholders and bondholders ready for such a large scale transition in our economy in the time to come.