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davepamn

M¢25 Funded By Mahalo ? | February 20, 2009 08:35 PM

Why does Asia fear nationalization when both Citigroup and Bank of America say, no to nationalization?

Is Asia looking at Long Term Capital management and saying "To big too fail means all deposits and assets will belong to the government?"

Citigroup statements suggest it does not intend or want to be nationalized.

Is the sell off a reaction to evaporating equity by Asian stock holders?

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deanmachin...

February 20, 2009 11:55 PM

I'm sure Citi and BOA do not prefer to nationalize, but at some point the government may have to say we can't bail you out on this, or at least not right now. If that happens and the government recommends some kind of short-term nationalization, I'm not sure what the banks can do about it.

A Guardian article mentioned that Asian shareholders fear being "wiped out" if U.S. banks are nationalized. This angle to the story is still new, so I can only guess that the Asian financial community, and probably financial communities around the world, might fear that Americans' money being controlled by the American government might give the government too much power? Not really sure, but certainly the crisis is being monitored carefully in Asia and how their stock market fares will unfortunately be affected by America's financial status.
Source(s):
http://www.nytimes.com/2009/02/21/business/economy/21markets.html?ref=busin...
http://www.guardian.co.uk/business/feedarticle/8368149

Asker's Rating:

• Do you interpret the bailout as a purchase of the bank or a loan? For example, Citigroup gave the US Treasury, $7 billion in stock. Does that action imply the bank is nationalizing? I don't see a move towards nationalization. I see the banks seeing off assets and debt reducing making them good

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