Bank Nationalization Redux

re: Bank Nationalization Redux

Gulzar — Wed, 21 Jan 2009 16:06:30 GMT

related, FT has these links http://ftalphaville.ft.com/blog/2009/01/20/51410/nationalisation-linkfest/ and http://www.nytimes.com/2009/01/16/business/16banking.html?em=&pagewanted=all the US had so far gone in for cash injections to ailing banks by the preferred share route so as to avoid taking direct ownership stakes and m,anagement control. but the deals with Citi and BoA, with the US govt becoming the largest share holder, exposes the limitations of this route. in fact, with losses mounting, we could well say, two or three months down the line, that Citigroup was the first bank to be re-nationalized in the US!

re: Bank Nationalization Redux

Gopi — Wed, 21 Jan 2009 03:56:06 GMT

Add the CLSA Strategist - Chris Wood - to the list as well http://www.ft.com/cms/s/0/480fd936-e691-11dd-8e4f-0000779fd2ac.html

re: Bank Nationalization Redux

Ashutosh — Tue, 20 Jan 2009 16:29:42 GMT

The argument that the nationalized banks would be able to borrow at a lower rate is true. However, this is relying on the credit worthiness of the government, which is in no way improving. The argument kind of overlooks the effects in other areas of the economy. On another issue, 'Bad assets remain bad, whether with the government or otherwise'. Governments bring in the additional element of inefficiency.