Citibank: To nationalize or not to nationalize.

[tigerbob]

As Citi looks for more Federal cash, the path the Obama administration may have to follow has already been laid out - for better or worse.

New York Times
By LANDON THOMAS Jr.
February 23, 2009

London - Is partial nationalization the cure for America's ailing banks?

The Obama administration’s plan to take an increased stake in Citigroup echoes the British government’s experience with one of its biggest banks, the Royal Bank of Scotland, a once highflying universal bank that is now nationalized in all but name only.

As with Citi, Britain’s involvement with R.B.S. grew in fits and starts. The government started with a minority holding last fall, when it pulled the bank from the brink of collapse, but continued to tighten its grip as the share price eroded.

Today it owns a 68 percent stake, allowing it to exert de facto control over bank management — which was replaced in a shake-up — as well as in lending and strategic decisions.

But such a policy, while cheered by those who advocate a more direct and forceful route to healing sick banks, is by no means a panacea, as the problems at R.B.S. show.

http://www.nytimes.com/2009/02/24/business/worldbusiness/24pound.html?hp

 

[Paulie]

If it ends up being 40% like what's been discussed, that's not nationalization.

 

[tigerbob]

If it ends up being 40% like what's been discussed, that's not nationalization.

I know. But it wasn't 50% of RBS originally either.

 

[Paulie]

The media's doing a real hack job on investor sentiment. It's like a different story out of their mouths as each report comes out.

I personally don't believe it'll be a minority stake, I think the government will take as much a stake as they feel they need to. They have to be very careful and tiptoe around their details because the tiniest little slip of the tongue can cause another mini crash.

 

[GHook93]

Citibank cost my company 55 direct jobs! There were 55 people working directly on their account! Fuck them!

Funny think they were trying to hold a seminar on retirement in my company. Usu they get a dozen or so people. This year not 1 person showed up and this was the first year they tried to bribe us with lunch.

Fuck them! Let them go under! I say let them fail and anyone who has a loan with them, get away Scott-free and no longer owns anything!

 

[editec]

I guess I keep failing to understand why we call it nationalization when our government is PAYING FAR TOO MUCH to bail out banks that have ZERO MARKET VALUE.

Could somebody explain to me why you think if we buy something people are calling it nationalization?

I must be missing something obvious.

 

[Paulie]

I guess I keep failing to understand why we call it nationalization when our government is PAYING FAR TOO MUCH to bail out banks that have ZERO MARKET VALUE.

Could somebody explain to me why you think if we buy something people are calling it nationalization?

I must be missing something obvious.

If the government takes a majority stake in common equity, they will essentially contol the company. That would be nationalization, Ed, because the taxpayers own a majority of the bank.

It's no different than what Chavez does, only it's not as hostile.

 

[Toro]

I think the end-game is nationalization for a few of the banks.

They will not allow them to go bankrupt, not after what happened to Lehman. Stocks fell 23% in five days and the inter-bank market seized up after Lehman filed, sending markets into chaos. They won't allow that to happen again, even if they only pay $1 for all the equity in the company.

 

[Charles_Main]

I only hope any steps taken, are temporary and do not become a trend toward More Permanent and Centralized Government control of the Economy.

I truly hope all this crap works, but Can not help but philosophically think it wont.

 

[Toro]

In his testimony today, Bernanke said they wouldn't nationalize the banks because "there's no need to." When he finished, the market took off like a rocket.

 

[Paulie]

In his testimony today, Bernanke said they wouldn't nationalize the banks because "there's no need to." When he finished, the market took off like a rocket.

I jumped out of my UYG before he started talking because I expected him to bungle it. Of course it shoots up 20% after I bail. Lost a few bucks when I could have made a few instead. Oh well. I don't have the emotional strength to daytrade

I found it interesting that the market moved up only slightly while he spoke but didn't really spike hard until he was actually finished. They were waiting to make sure he absolutely had nothing BAD to say before they pounced, LOL.

 

[wimpy77]

In his testimony today, Bernanke said they wouldn't nationalize the banks because "there's no need to." When he finished, the market took off like a rocket.

yep and he said that they wouldn't wipe out the common stocks. we will see what happens after geithner gets finished tomorrow.