So let's say the government goes ahead and nationalizes just Citi and Bank of America. How much does a healthy (assuming the nationalization is executed well) BOA and Citigroup impact USB? It seems that USB has benefited from the lack of lending capacity of zombie banks, so will this trend reverse? Does that hurt USB's market share?
The bottom line people: its time to get out of the banking/financial sector. IT's way to volatile, unstable, and downright risky. Every bank stock is on a bearish downward trajectory, and have seen all time lows. That doesn't mean its going to rebound, it means its gonna get worse, and with the way the economy is, it would be asinine to hold onto or go long on any bank stocks right now.
Annie, it means possible wipe-out of common equity holders and financial loss to some preferred and bond holders. That's a serious loss for mutual funds, 401K's, for college savings plans, for pension funds, perhpas for bond funds and for YOU, to some degree, if you have any financial investment in the U.S. It also impacts confidence in internation banking exchange trade.
You do NOT get to select who gets the nationalization bank guillotine. Some in the harking halls of our centralized government planning are reported to be CONSIDERING one ALTERNATIVE of nationalizing 50 of the largest U.S. banks.
Nationalizing, or forced merger of a bank with 500 or fewer employees is much different in it's effect and implementation than C, or BAC, or USB in my opinion.
I hadn't heard that there is talk of nationalizing the largest 50 banks. That is scary news, indeed! I hope that we can trust in Obama and his spokesman who say that they do not believe in nationalization. You are correct to point out that it would be a serious loss for many people. Many retired people hold mutual funds in their pension plans, and in their own 401 K's and 403 B's. It would be disastrous for our nation and its people.
I do think something needs to be done with Citi, and they need to do it soon. But why should they lump all of the other banks in that category? Some of the others are well run and can make it, given some time for this economy to settle down. I'm not sure about BAC, even though Lewis says they are fine. When the 8 CEO's appeared before the Congressional committee, it did seem to me that Pandit and Lewis (C and BAC) got queried by the legislators far more than the other 6 men did. I think they were trying to decide then what should be done with those two particular banks. Maybe I'm wrong, but that was my take on it. I think it's a shame that the original TARP money was "forced" on the banks, supposedly so that the American people wouldn't be able to see who really needed the money and who didn't. Perhaps if they had taken care of C and BAC at that point, this problem would now be close to resolution.
I haven't been reading too much about Citicorp but from what I've read Bank of America has been continuing to make loans and for that reason Mr. Lewis is appalled and bewildered by all the talk of nationalizing BAC.
Realize this: nationalizing anything will drive the stock price DOWN. EVEN the fear or talk of nationization will turn your stock into DUST. Nationalizing BAC or C will NOT help UBS. Do you realize stock price is based on demand and confidence in investors, what does that say when the govt needs to take over the major banks in the industry? that doesn't bring any confidence that the other banks are doing well AT ALL. And even if the GOVT takes over, it will take years before they can right the ship. Running huge corporations/banks such as C and BAC is an inordinate task, something that can't be done overnight. And quite frankly, the government doesn't have the manpower - capable individuals who are smart enough to run banks of this magnitude.