Bank of America and Citigroup fall on nationalization fears

February 20, 2009 by · Leave a Comment
Filed under: Industry News 

I am seeing a lot of PR about nationalization not being the case but if you look at the Comptroller of the Currency report(page 21) of the top 25 banks I posted a couple days ago, you will see that if they do not do something with this plain massive derivative exposure, the U.S. will not be able to bail them out.  BofA had $39 trillion dollars of exposure alone.  I think something major will happen this weekend and the markets are not going to like it, everyone now is jumping out while they can.  This looks to be going the way of WaMu, Bear, Lehman, GSE’s, etc….   

News:

Bank of America Corp and Citigroup Inc shares plummeted for a sixth straight day on Friday, hammered by fears that the U.S. government could nationalize the banks, wiping out shareholders.

Bank of America shares were down 19 percent to $3.20 in early trading, their lowest level since 1984, while Citigroup shares fell 20 percent to $2, their lowest price since the early 1990s.

Both stocks have lost more than 90 percent of their value in the last year.

“It’s a clear sign that the markets are expecting a high probability of them being nationalized,” said Mike Holland, founder of Holland & Co. “The clear expectation is that shareholders would effectively be wiped out.”

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