Will Citi and B of A be Nationalized? (credit, buy, financial)

[Humboldt1]

Why do you guys think?

I never would have thought it possible a year ago but we seem to be possibly headed in that direction.

And if the big boys are nationalized what happens to the smaller banks?

[Philosophizer]

for all intensive purposes, they already are. read here.

Bloomberg.com: Worldwide

[chet everett]

No. Nationalization would not work for any US bank. The negatives of any sort of full "Federal take over" would be enormous.

Worst case their would be some sort of neo-Continental National Bank of Illinois -- http://www.fdic.gov/bank/historical/...%20Illinois%27

A dozen or so pages into that link (it is a chapeterized think, so look for page 249) it is explained that CNBI was not technically speaking just "too big to fail" but more accurately "too big to liquidate in an normal fashion" (which is what the FDIC does with even "biggish" banks like IndyMac when they become woefully under fundeed).

In a "neo CNBI" scenario I could see FIDC and FRB over seers wading in and carving out the "protected depositors" that have < $250,000 and allowing some normal "retail banking" operations to continue, while closing down more and more of the 'correspondant' banking operations that BofA and/or Citi had entered into as more of a "banker to banks and investors" kind of thing. The probably is that the "exotics" (CDSs, MBSs, CDOs and other stuff that is even less well understood) would have to be undone in an orderly way. I can't see how that would happen for JUST these guys and other banks that were not as reckless would be left to stew in their own poo as it were... The "dirty diapers" can only be changed for all the banks or none. The time frame to set up "the mother of all SPIV" is probably 6-8 months MINIMUM (which is why it did not happen prior to the elections). Even an orderly auction process would need at least several weeks of torture. Once ALL the banks "bring out their dead" the "bad bank" should prevent the house of cards from collapsing...

[Humboldt1]

I agree that the formation of a "Bad Bank" to house toxic assets seems more likely than nationalization of the larger financial institutions such as Citi and B of A.

[Dexterguy]

I am not totally against national banks, but just the name Bank of America digusts me, especially what they did to that window factory in Chicago (they shut them down because they would not give them any credit). WHAT WAS THE BAILOUT FOR!! To help businesses, and Americans keep their job, not the oppisite of what they have already done, which is buy up a ton of healthy banks and lay more people off.

In my opinion the bailout just fueled B of A's destruction of this country.

[Ultrarunner]

At least Bank of America could keep the same name