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Dodd Says 'Nationalization,' Markets Tank

Sen. Chris Dodd (D-Conn.), chairman of the Banking committee, offhandedly -- or maybe not -- said around 1 p.m. today that nationalization of some banks may be necessary "at least for a short time," which accelerated a fall in the markets today.

Nationalization -- or government control -- is the worst fear of every business, especially banks, and Wall Street acted accordingly: Although the markets had been down between 1 and 2 percent, in the moments following Dodd's remark, the S&P 500 briefly fell more than 3 percent.

Shares of Bank of America, Citigroup and Wells Fargo were down more than 25 percent.

The markets have recovered somewhat, partially because of CNBC's report that Treasury Secretary Tim Geithner will release new details of the bank rescue plan next week and partially because the White House downplayed the nationalization rumors. Nonetheless, the downward spike confirms the markets's jitters.

White House spokesman Robert Gibbs said today at his news briefing that the administration continues to "strongly believe that a privately held banking system is the correct way to go."

-- Frank Ahrens
The Ticker is Twittering!

By Frank Ahrens  |  February 20, 2009; 2:52 PM ET
Categories:  The Ticker  | Tags: Bank of America, Citigroup, Dodd, Wells Fargo, banks  
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Comments

Nationalization of the big banks makes sense on several front. First, every time we turn over a rock in the "financial services industry" garden, we discover some new scam, another Ponzi Scheme, more fraud, some other criminal action. Big banks, big credit instiutions, are dangerous and they need to be nationalized, their former executives fully and thoroughly investigated (and proecuted and jailed...or, better, executed). Then, before restring them to pirvate status, they need to be broken up into small units. Big banks serve no one but Wall Street scum

Posted by: mibrooks27 | February 20, 2009 3:20 PM | Report abuse

I don't think every fluctuation of prices on the market is the result of reportable events occurring in the 'real world'. It's goofy to pin responsibility for a change in the market on a specific action or event. People are selling off because the economy is in a hand-basket. People are selling off banks specifically because banks are in a hand-basket. Speculating about speculation... I love it.

Maybe it was Leonhardt's post on NYT about how stocks are still not cheap by historical norms? Or maybe it's setting in that the Fed's minutes earlier in the week are the best information we've got available about what's going on in the broader economy. Or maybe it was because... or maybe... or perhaps... hahaha... how foolish.

Posted by: BertinDC | February 20, 2009 4:13 PM | Report abuse

The post by mibrooks27 validates what the fear mongers are saying- that the US today resembles nothing more than the beginnings of the Third Reich. Execution of Bank executives- ARE YOU CRAZY OR JUST STUPID? who are you gonna call when your executioners come for you-and always do come for the nuts. Take a breath, calm down, and get with the real issues that need to be dealt with, if you've got the
wherewithall.

Posted by: buknekkid | February 20, 2009 4:36 PM | Report abuse

Great! Bankers, the great robber barons, need to start running all the way to the border -- if the vigilantes don't get to them first!!!

Nationalize their (buttocks) now!


Yeagh!

Posted by: bs2004 | February 20, 2009 5:02 PM | Report abuse

Nationalization - what a great idea! That's always worked in the past, I'm surprised nobody thought of it before.

Posted by: gfr1231 | February 20, 2009 5:55 PM | Report abuse

Chris Dodd is a moron and an economic criminal. It's Democrats like Dodd and Franks who helped put us into the crises by pushing through legislation to make it easy for deadbeats and speculators to get no down sub-prime loans. Chris Dodd should be tried as an economic terrorist.
Dodd is a despicable waste of human flesh.

Posted by: occam2 | February 20, 2009 6:02 PM | Report abuse

I always wonder what mysterious person the "market" is.

Or who speaks for the market, to divine its intent?

Weird.

Posted by: jgwlaw | February 20, 2009 8:29 PM | Report abuse

"It's Democrats like Dodd and Franks who helped put us into the crises by pushing through legislation to make it easy for deadbeats and speculators to get no down sub-prime loans."

Wrong... its republicans like Phil Gramm who made it easier for CitiGroup to pull down banking regulations which could of prevented it.

In any case.. the 8% or so mortgages in default did not bring down the economy. It's the credit default swaps when they repackaged these loans... now their value is in doubt and that is what is causing these banks to go under.

Also... the CRA by the way does not "force banks to make loans" and the sub-prime lenders weren't even subject to the CRA.

Posted by: pmc123 | February 21, 2009 2:02 PM | Report abuse

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