If you've been watching Fast Money, you know there are whispers on Wall Street that some of our nation's largest banks may be nationalized.
On Thursday Citigroup shares fell to 17-year lows with Bank of America stock also plunging, amid that kind of speculation.
"When you talk about nationalization you hear the names Citi and Bank of America as the top two names burning out," said Walter Todd, a portfolio manager at Greenwood Capital Associates. "We still don't have any clarity about what course of action they (the government) are going to take. In the absence of specifics, people just jump to their own conclusions," he added.
That kind of talk is picking up steam.
As you might remember on Tuesday's Fast Money Jeremy Zirin, UBS wealth management senior equity strategist, told Fast Money that if the government were to make a list of the banks most likely to be nationalized, Citigroup and Bank of America would be at the top of the list. Those are “the banks with the most toxic assets exposure,” he said. (Click here to read that entire story.)
The on the website yesterday we gave you all the details about Senator Lindsey Graham who's among a growing number of Republicans calling for nationalization.
If institutions are truly "zombie banks," he said, one option for the government "would be go in, take the bank over, restructure it, break it up, sell it, get the money back. And you can call that nationalization if you want to." (Click here to read that entire story.)
And on Wednesday's Fast Money, nationalization was our Schwab Question of the Day. Since the question seems so pertinent, I thought we'd post it again.
What do you think? Tell us now!
Fast Money readers have some strong thoughts on the issue. Brad M. writes, "Please push for nationalization on your show. Fire the management, and please nobody gets anything, wipe out all and start over. Its the only way to restore confidence in the system."
Will B. has an interesting take. He writes, "the problem with the capitalization of bank stocks like Citigroup and Bank of America is that the hedge funds and other speculators are short-selling the shares of these companies, causing their share prices to go down at a rate greater than others. As long as this continues, nothing good that these banks do is going to cause their share prices to stabilize or go back up."
As you may know last month, Bank of America Corp posted its first quarterly loss in 17 years, largely due to mounting losses at recently acquired Merrill Lynch. Citigroup has lost $28.5 billion in the last 15 months, hammered by bad debts and toxic assets.
Each bank received $45 billion in government aid in recent months.
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