Bernanke's Slip May Have Caused Bank Share Tumble
Bank shares have been hammered for two days and some traders are pointing to a "slip of the tongue" Fed Chief Ben Bernanke made when answering questions at the national press club this week.
When asked if he supported former fed chief Alan Greenspan's statement that some banks will have to be nationalized he said, "Whatever actions may need to be taken at one point or another, I think there's a very strong commitment on the part of the administration to try to return banks ... or KEEP banks private or return them to private hands as quickly as possible".
Up until then everyone in the government had said nationalization is not being considered. To some investors and traders, Bernanke made it sound like nationalization is much more likely.
The CNBC clip of Bernanke's speech has been flying across trading desks via the internet, with viewers trying to figure out if Bernanke is suggesting that indeed there is some kind of backup nationalization plan.
What do you think? (Watch the video on the left)
Fears of nationalization of banks have hammered not only the stocks of the major banks, but now the preferred shares, and noticeably in the last 24 hours, the debt has also been selling off as well, for fear it will not be protected as it has been in bailouts done thus far.
The Banking index hit a new multiyear low today and the KBW Bank ETF fell 7 percent. Citigroup dropped below $3 a share, Bank of America is below $4, Wells Fargo was down 7 percent and JPMorgan was down 3 percent.