Submitted by Yi-Wyn Yen02.20.2009
Thunderdome
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This prediction is closed and has been judged.
The Senate's Banking, Housing, and Urban Affairs committee chairman Christopher Dodd (D - Conn.) said that some banks may need to be nationalized in order to save them. Senator Dodd told Bloomberg TV, "I don’t welcome that at all, but I could see how it’s possible it may happen. I’m concerned that we may end up having to do that, at least for a short time.”
His comments sent Wall Street spiralling and bank stocks for Bank of America (BAC) dropping 11% to $3.48 and Citigroup (C) down 20% to $2 in late-afternoon trading on Feb. 20. And analysts say a takeover of Bank of America or Citi from the federal government would basically wipe out current shareholders of those banks.
BofA CEO Ken Lewis had told CNBC in early February that nationalizing banks, even temporarily, was "not even a remote possibility."
Prediction: An announcement that at least one major U.S. bank will be nationalized by April 30, 2009.
Image: Thetruthabout/Flickr
Price History
Prediction Statistics
| Betting Closes: | Apr 30 2009 | Current Consensus: | 3.56% | Total Bets: | 21 |
| Today's Change: | 0% | ||||
| Life Time High: | 48.75% | ||||
| Life Time Low: | 3.56% |
Comments
Despite all the talks about nationalization, the government is against it (Congress and Obama administration). BofA and Citi are also both against it.
BTW, what's the definition of nationalisation for the purposes of this prediction - %100 ownership, Majority ownership, largest shareholder etc?
IMO, nationalization not only means majority control but having the obligatory role of running the institution and is responsible for meeting all the institution debts.
The current consideration of raising stake of Citi to 40% does NOT meet the nationalization criteria.
Majority ownership.
No nationalization as per Fed Reserve Chairman.
“I don’t see any reason to destroy the franchise value or to create the huge legal uncertainties of trying to formally nationalize a bank when it just isn’t necessary,”
“we don’t need majority ownership to work with the banks” to ensure they are lending to consumers and businesses.
The Treasury will buy convertible preferred stock in the 19 largest U.S. banks if stress tests determine they need more capital to weather a deeper-than-forecast recession. The shares would be converted to common equity stakes only as extraordinary losses materialize, he said.
It's getting closer. The U.S. government is boosting its share in Citi to 36%.
I cashed out of this bet and a few minutes later I read this report (see below) from a link in afr.com's Downtown column.
http://www.kc.frb.org/speechbio/hoenigPDF/Omaha.03.06.09.pdf
I have subsequently jumped back in (admittedly at a slightly lower level that before).
Judged against.
Ian Lamont
Managing Editor
The Industry Standard
twitter.com/ilamont
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