Dodd: Nationalizing US Banks is Possible
Christopher Dodd, chair of the Senate Banking Committee, said that it's possible that some of America's floundering banks would be nationalized in the short term. Even that seemingly offhand statement pummelled the stocks of Citigroup and Bank of America, which received nearly $100 billion in bailout money.
Dodd repeated the government's official stance, that nationalizing banks is not something that Washington wants to do, but is not willing to just let the banks fall apart.
(Also see Zombie Banks)
Meanwhile, banks are still figuring out what to do with proposed compensation restrictions, though throwing money at executives didn't have such a positive effect, as, well, here we are.
“I don’t welcome that at all, but I could see how it’s possible it may happen,” Dodd said 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.”
Citigroup and Bank of America, which received $90 billion in U.S. aid in the past four months, fell as much as 36 percent today on concern they may be nationalized. Citigroup, based in New York, fell as low as $1.61. Bank of America, based in Charlotte, North Carolina, tumbled as low as $2.53.
Dodd also said he doesn’t want U.S. automakers to go through a prepackaged bankruptcy or a “forced merger.” General Motors Corp., Ford Motor Co. or Chrysler LLC risk liquidation with such actions, Dodd said on the broadcast.