Dodd Says Short-Term Bank Nationalization Might Be Needed as Shares Plunge

[Purveyor]

Source: Bloomberg

By Alison Vekshin

Feb. 20 (Bloomberg) -- Senate Banking Committee Chairman Christopher Dodd said it may be necessary to nationalize some banks for a short time as Citigroup Inc. and Bank of America Corp. tumbled today on concern the U.S. may take over both banks.

“I don’t welcome that at all, but I could see how it’s possible it may happen,” Dodd said in an interview on Bloomberg Television’s “Political Capital with Al Hunt” to be broadcast later today. “I’m concerned that we may end up having to do that, at least for a short time.”

New York-based Citigroup and Charlotte, North Carolina-based Bank of America, which have received $90 billion in U.S. aid in the past four months, fell as much as 19 percent today.

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aEvPzrV6pF88&refer=home

[Romulox]

1. Chris Dodd: Wall Street shill who's been right about nothing having to do with the TARP so far.

Remember when we were trying to determine if the US could "afford" to send $4-5 billion to Detroit?

No such concerns, when NY, NY is concerned!

[karynnj]

4. You have it wrong

Nationalizing banks that have fewer assets than liabilities - gives the shareholders nothing. This plan is better for tax payers and worse for wall street. They prefer the "Bad Bank" method that buys the toxic assets at a negotiated price. this leaves the shareholders with value because the government made the asset/liability positive.

That is why wall street was so unhappy with Geitner's talk - they thought that Geitner was going towards what they wanted - and he cut back from it.

[Romulox]

5. "SHORT TERM nationalization" means that the profits go to private equity, losses to taxpayers.

This "short term nationalization" (is this even a logically coherent concept? Are we buying a timeshare in a bad bank?) will end immediately upon these banks' return to profitability, of that you can be assured.

"They prefer the "Bad Bank" method that buys the toxic assets at a negotiated price. this leaves the shareholders with value because the government made the asset/liability positive."

Yeah, the plan is called "TARP"--Dodd championed it, and a second TARP bill will be shoved down our throats presently...

[karynnj]

6. That depends how it is done

It was what they spoke of in getting Tarp, but they actually did not do it. Geitner did speak of an attempt to get private equity involved, but I have yet to see anyone say that it was likely they would do so.

[Romulox]

7. Chris Dodd has been there the whole time, pushing for money to Wall Street.

You think his corporate paymasters have used up all the time on their meters? I don't; they can pay Dodd back with US taxpayer monies after he's secured a few hundred billion more for them.

[DBoon]

2. Please, please nationalize Bank of America

I cannot imagine the service getting worse than it has been

Government provides poor service out of lack of organization and focus

The private sector provides poor service as a deliberate business strategy to reduce costs.

Once again, the private sector shows itself as more effective in meeting its goals.

[RedEarth]

3. Danish newspaper claims Citibank has cut all lending in Denmark.. maybe the UK as well

Posted by Edward Harrison on Thursday, 19 February 2009 19
Feb

This comes from the Danish daily Berlingske Tidene. It suggests that Citibank is cutting back all international lending. Citigroup has sold its German operations to a French bank and I understand they are cutting credit lines in the UK as well. In seeing all these stories together, one gets a full view of the kind of cutbacks now ongoing at troubled banks like Citigroup.

Citibank has stopped lending

- We are not offering loans at the moment because of the economic situation.
That is the message when you call to get a Citibank Denmark ‘quick and easy loan.’

The Bank has just closed itself for what banks are best: lending money. And it is still uncertain when Citibank will start lending money again, writes Ekstra Bladet Netsite, eb.dk.

Finn Ostrup who is a professor of Finance at Copenhagen Business School, believes that Citibank Denmark’s American owner, Citigroup, is about to go bankrupt.

“Citigroup would have gone bankrupt in December, unless they had been helped by the U.S. Government.

“They are still threatened with bankruptcy, and I think that is why they will not lend more money,” says Finn Ostrup to Ekstra Bladet.

For Danish Citibank customers bankruptcy could be a hard blow.

“If Citibank terminates loans, they might not be paid back right away,” says Finn Ostrup.

“If that happens, customers may try to obtain money elsewhere. But if Citibank does not have the option of canceling loans, customers will have no problems,” he says.

Ekstra Bladet tried all day to get a comment from the responsible representatives from Citibank, but failed.

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