“They’re going to appoint management. They’re going to make the financial decisions. The risk is they’ll be making the lending decisions. Is this really what we want?” (CNBC)
After Citibank shares hit an 18-year low this week, a recent proposal could give the government as much as 40 percent control of the company’s stock.
We’re tracking reaction from the Huffington Post, MSNBC, CNN, the Chicago Tribune and BBC Radio.
The Huffington Post looks to define the word ‘nationalization,’ saying the reality is different from common perception. “Nationalization does not mean ‘government-run banks.’ It means temporary seizure and restructuring. Customers are protected. Depositors are protected. Jobs are protected. The government puts the valuable parts of the bank back in private hands as soon as it can.” (Huffington Post)
CNBC’s Squawk Box looks at the possible effects of the government’s latest proposal.“… the impact on the taxpayer is not a dime, they’re not going to be pumping any more capital at this point into the bank, it’s simply a conversion. But the impact to shareholders, certainly the common shareholders, will be dilution since we will have that big conversion.” (CNBC)
CNN’s Clark Howard is unsympathetic towards banks and shareholders. Saying this about banks like Citibank…“… they’re dead men walking. And you and I are on the hook for it. And if we’re on the hook for it, the stockholders should not be bailed out by you and me, period.” (CNN)
The Chicago Tribune has the perspective that, while nationalization may not be ideal, it may be the best option.“Nationalization is scary, all right. But so is the alternative: the malaise and mismanagement we have witnessed since the financial system started breaking down last summer… can nationalization be much worse?” (Chicago Tribune)
Looking across the Atlantic - two of Britain’s largest banks are over 40 percent government owned. A corporate finance specialist from London’s Cass Business School talks to BBC Radio 4 for the British perspective on nationalization. “Some of our largest banks need substantial restructuring… That, frankly, is much easier to do when there’s one owner who can go ahead and do it outside of a complex ownership structure. So nationalize it, clean it up quickly, start new banking again.” (BBC)
So, what do you think? Is temporary government control of banks necessary? Do you think this will lead to more permanent government ownership? Will this provide stability for large U.S. banks?
Please share your thoughts with us on Newsy.com and be sure to visit our sources.