Obama tries to halt talk of bank nationalization

[Frank Booth]

Source: AP

The White House on Friday insisted it's not trying to take over two ailing financial institutions, even as stocks tumbled again.

On Wall Street, talk of nationalization of Citigroup Inc., and Bank of America Corp., prompted investors to continue to balk, worried that the government would have to take control and wipe out shareholders in the process. Citigroup fell 20 percent, while Bank of America fell 12 percent in afternoon trading but also came off their lowest levels.

"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," White House press secretary Robert Gibbs said when asked about nationalizing the banks.

"That's been our belief for quite some time, and we continue to have that," Gibbs said.

Read more: http://finance.yahoo.com/news/Obama-tries-to-halt-talk-of-apf-14427645.html

[dpbrown]

1. They need to be put into receivership, and they can buy their way out when they're healthy

I don't think Obama should back away from talk of nationalization. If the taxpayers are going to foot the bill, then they should take an ownership interest.

[earthside]

22. "Ownership interest" ...

... means you get the liabilities, too.

The big banks derivatives exposure could be in the hundreds of trillions of dollars.

It is crazy to think that the U.S. taxpayer should be on the hook for the consequences of the greed, irresponsibility and corruption of these banks to the tune of many, many trillions of dollars.

In this case 'nationalization' and taking an "ownership interest" would be truly socializing the losses.

No way.

[No Elephants]

42. No. A stockholder is not personally liable for the losses of the enterprise in which it

owns stock.

[biopowertoday]

34. I think it needs to be on the table for the Admin. It does

not have to be exactly as the Swedish model was--which I understand to be that the stockholders got trampled on. We have smart people--they can modify it as necessary.

But to take it off the table is wrong -IMHO.

[DJ13]

2. Obama needs to stop bad mouthing nationalization

Even if he wants to avoid it from happening, he should be neutral in public just in case things take an even bigger turn for the worse and they have no choice but to nationalize a couple of large banks.

By remaining steadfast against it now he's leaving the opposition party an opening to say he doesnt know what he's doing should nationalization be necessary later.

Who's advising him, Summers?

[Lucky Luciano]

4. Nationalization talk is bad because this is a crisis of confidence...

...and if nationalization is publicly on the table (I would bet you a pretty penny it is on the table behind the scenes), then the crisis of confidence will get much worse and the vicious cycle will continue. That said, LEH should have been nationalized. If the government had taken over LEH and backstopped all of their liabilities, then the cost of doing that would have been less than $787B (I postulate that the fact that things have gotten catastrophically worse in the last 4-5 months is a direct result of Lehman's BK).

[Oregone]

12. You honestly think the perception of "crisis" is what is causing this mess?

[Psephos]

17. Yes. Markets and credit are based on trust and the rule of law. Trust is based on perception.

The actual value of anything is only what someone else is willing to pay for it. By definition.

[Oregone]

38. Thats sort of horseshit...

Banks have become the instigators of Ponzi schemes. There is a load of debt out there, with no valued assets to back them up. Profits and returns were based on funny math accounting methods and mass corruption. The entire value of everything was based on an illusion that shattered. The loss of confidence didn't cause the crisis, but rather, the crisis caused the lack of confidence. Everyone finally discovered that these assets they had were toxic and had no value, and the banks have no liquidity. Of course, no one will have confidence in that....

Here is the problem with the way you are looking at it...if everyone just believed and was confident again, there would be no problem... (this cannot be the case though, because there is a looming problem in this financial crisis).



Now, I agree that the "actual value of anything is only what someone else is willing to pay for it". But consider for a moment, a society of people who were at one time paying $1 dollar for a rock. Then, through fuzzy math, advertising, confidence, perception, and other factors, they decided as a people that $100 dollars was a fair price to pay for a rock. Then, it became certain that $100 dollars was a decent price to pay for a fraction of a rock, or maybe 1/100th of a rock....

What if one day all those rock investors found out there was really no rock? Just their money, a black hole, and well paid brokers who created an illusion? Confidence or not, you cannot fix that problem. That is a crisis, and a symptom is a loss of confidence (not a cause).

[No Elephants]

41. Actual value is different from market value; and actual value of a company is

different from the market value of its stock. There is such a thing as a stock's being overvalued (or undervalued) by the marketplace. They were probably overvalued 6 months ago and SOME may be undervalued now.

[dcindian]

3. Once again the fat cats of wall street dictate through coercion

The banks are nothing but a criminal organization which creates money with the support of this and other governments. They then lend that money to the government's captured audience. It keeps the governments captured audience captured. The banks while owned by private enterprizes could never operate in a legal manner and must operate by creating monies with the wink and the nod of the government. They are, have been, always will be nationalized in that respect.

If we forced banks to operate fully privately according to their assests they would all fold. Every single one of them.


There is really nothing to them but some paper their real value is much much much less then their perceived value.

[ananda]

5. Yes, rational action would..

.. stop all the self-interested greedy looting.

[Jkid]

6. Just nationalize the banks and get it over with.

Does he want a real depression!? I already faxed the White House a letter suggesting him to nationalize the banks yesterday afternoon. However, I doubt that he'll ever reply.

[w4rma]

18. Agreed. Just do it. And do it, soon. He needs to quit listening to the DLC Rubinites. (nt)

[Ed76638]

7. Dumbass. n/t

[alittlelark]

15. Uh, yeah...... n/t

[Zhade]

8. That's pretty stupid, given that the banks FUCKED UP THE ECONOMY.

NT!

[Still Sensible]

9. He has to keep saying that at this point

As the stock in those banks continues to tank, I am sure they are crying to the White House that what has caused the latest drops is speculation that they would be nationalized. So the President, through the press secretary, tries to quell the rumors in this manner.

Once the banks are clear they will utterly fail, and it is not because of rumors, that is when the White House will look at the nationalization model. There have already been reported discussions about the prference for a "Sweden" style plan.

[dysfunctional press]

10. it's looking like the only way that we're going to get the revolutionary changes people WANT...

is to stage an actual revolution. :shrug:

[debbierlus]

11. They are nationalized - with funding but they keep all the control

Fuck that...

Shareholders & the company can eat it. That is how the system works. This privatize the loss, publicize the loss, ENOUGH.

Wall Street is upset because they think they might have to bear some of the loss. Poor babies.

[iamthebandfanman]

13. screw the banks!

i want nationalized health care and energy!

[onehandle]

14. Take the banks. Take the oil companies. Take the pharmaceuticals. Take the arms industry.

Save America.

[Lorien]

27. I like this idea

:thumbsup:

[girl gone mad]

16. The headline is really pushing it.

Read between the lines. Obama absolutely did not halt nationalization talk. They made a couple of very weak statements, at best.

[burrowowl]

19. NATIONALIZE, NOW

NATIONALIZE!
JHC OBANA, wake up!

[unkachuck]

20. "...that a privately held banking system is the correct way to go..."

....a clean slate doesn't appeal to you, gibby? A real 'bank of america' back by the full faith and credit of the United States government won't bolster public confidence?

....oh, I get it....your corporate buddies want you to pour trillions of taxpayer dollars down their corporate rat-hole BEFORE we go to a national banking system....

[bertman]

21. I think it's the onslaught of media "outrage" that would accompany nationalization

before BOA or Citigroup actually tank that keeps them dancing away from the nationalization talk. They're letting their surrogates, including a few Republicans, do the softening up. Once the big banks go down it'll be much easier to say the time is right.

It's a political tightrope. Sad, but true.

[Frank Booth]

23. I hope you're right, because I don't want to see even more money wasted

due to some phony principles that aren't worth a dime anymore. I'm sick of allowing people who should be rotting in jail to continue their control of these fraud-riddled institutions.

[bertman]

25. Me too, Frank. And, of course, I'm being optimistic since I have no inside line to the

Obama White House. But it appears inevitable that these financial institutions are going to fail and nationalization is the only sensible way to deal with it. IMO.

[defendandprotect]

30. Who is left watching "media" . . . ??? And why?...??

[bertman]

44. The same ones who are watching it now. The same ones who go home, turn on the tube,

watch or listen until bedtime, then turn it off--or fall asleep in front of it.

The folks who are addicted to Survivor, Lost, Gray's Anatomy (is that still on), and a gazillion other shows whose only value is to entertain and distract--and sell consumer goods.

Seems that this is a sizable chunk of the population, too.

[Lorien]

26. Didn't Sweden and Japan find that Nationalization was the ONLY way to go

after their banking crisis? I don't think that Obama ought to be taking this stand at this time given the history of these situations.

[defendandprotect]

31. What you have to guard against after NATIONALIZING . . . is re-privatizing .. . !!!

Once you take them over, you have to hold them -- not turn them back

-- especially at auctioned or reduced rates.

How many damned banks do we need, anyway?

[Lorien]

36. Is that what happened in Japan and Sweden?

I really don't know, but "Socialism" is looking more and more appealing to me...

[defendandprotect]

37. Well, the S&L theft and embezzlements ended up with us taking over the

banks -- I don't know what they officially called it/? ---

but later either ALL or some of those banks were sold back into

the private market again for very little money.

Also, our experience with Amtrack has been that we took it over and restored

it and then put it back into private hands --- where it was a failed mess

again -- and then at least once more the government took it over and did the

same thing again!! Don't consider this info official -- it is vague memory.

But the S&L thefts and embezzlements costus us a minimum of $600 billion or

more!! If I remember and have time, I'll try to recheck the Amtrack history.

[Skink]

24. Why does nationalization entail wipeing out shareholders.

Can't we just suspend dividends for say 5 years while reorganizing?

[Thickasabrick]

32. I hope someone will answer this, I'm wondering about this too. I

don't think it's fair that someone who invests in a bank thinking it is a safe investment should automatically lose everything just because the bank "gets eated" by the feds. I like your idea about the 5 year thing.

[w4rma]

35. I do. Investments have risk. That's the negative side to not having to go out and produce things.

You might lose your investment, no matter how safe you think it is. So, quit voting Republican if you want your investments safe. But, vote Republican for higher return and higher risk.

[defendandprotect]

33. Obviously these "shareholders" don't see the books, can't direct the company

dealings -- unlike holders who are family members.

But, really, isn't that the point of all of this -- incoming money, little restraint?

We can nationalize and pay the dividends -- and buy out the shares as it becomes possible.

Continue to "INSURE" extended corruption will bankrupt us --

The insurance on banks was intended for the odd bank going down -- not the whole system!!!

[Frank Booth]

39. That's the whole point of buying stocks. You make money if they go up, you lose

money if they go down. Companies fail all the time and shareholders get wiped out (even creditors usually don't get all their money back). The reason to nationalize the banks is because they're failing anyway. They're only on government life support right now, and there would be nothing unfair whatsoever about nationalizing them and wiping out the shareholders (the stocks of many are already basically worthless anyway). The only value left in the shares is based on the hope that the government will provide more money with no strings attached.

If you want an investment that has the potential for a huge payoff buy some Citibank shares. You'll likely lose your investment, but there's also the possibility it will eventually go back up to $50 a share, and you'll make 25x what you put in.

[defendandprotect]

40. That's the whole point of capitalism . .. if it fails it's supposed to go down .. .

it's not supposed to be "too big to fail" --!!

We're supposed to be enforcing our anti-trust/anti-monopoly laws--!!!

I'm not suggesting that we prop up shareholders or give them something beyond the value

due for their stock. No taxpayer money should go to dividends.

Citibank supposedly is on death watch - and if I recall correctly I think they launder

about $500 billion of drug money every year?

[fascisthunter]

28. I Wonder if He'll Have to Eat Crow Later on This

or did he know he would, and decided to put on the face that he doesn't intend on nationalizing the banks. Hmmmm...

[defendandprotect]

29. We should takeover and check out the books -- horrifying as it may be . . .!!!

Either we're going to keep throwing money at them -- or we're going

to NATIONALIZE them --

The trick is that we keep them -- they never get privatized again -- !!!

Let's be sure of that because last time around they auctioned off the banks!!!

[No Elephants]

43. Today, George Will commented on This Week that Lesley Graham accepts

that we must nationalize the banks, while the Obamadmin does not. He added, "That's how through the looking glass we are."

Yep. Meanwhile, the financial institutions blow the money we already gave them.


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