Citigroup and Bank of America are fearful of bank nationalization. According to CNN Money, both banks have nationalization concerns and are seeing negative returns in the stock market, "...shares of Citigroup and Bank of America [are] down to 52-week lows. Shares of Citigroup recently recovered were down 20% at $2.01, while Bank of America shares have fallen 10% to $3.52."
This means that shareholders are most likely concerned as well.
However, are these fears of bank nationalization unfounded? Today, White House spokesman Robert Gibbs said, "This administration continues to strongly believe that the privately held banking system is the correct way to go." It seems that it is too early to determine what exactly will unfold.
What exactly would bank nationalization mean for Americans? CNN does a terrific job of explaining the nationalization system, "Nationalization gives the U.S. government the power to control banks. That power could mean anything from taking control of the public shares to replacing existing management, installing a new board of directors and setting corporate strategy."
Keeping this in mind, could the US be headed towards a Big Brother, Police-State system? I wouldn't make that dramatic, 1984 style conclusion just yet.
Bank nationalization may simply be analogous to parents chaperoning a high school dance. The students are free to do as they please, but within reason, and under a watchful eye. Moreover, after all that has happened, perhaps the Republican, laissez-faire approach to government is not the most effective.
Bank nationalization is in my opinion a legitimate option which even Alan Greenspan, former chairman of the Federal Reserve seems to deem viable.
As a result, Citigroup and Bank of America shouldn't fear bank nationalization, they should focus on regaining the trust of their shareholders. Government regulation isn't necessarily a terrible option.
By Bryan Wisotsky of Storybook Vacations.
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