Citi, Bank of America Not in Nationalization Talks

Executives at Citigroup and Bank of America both said Friday they are not in danger of nationalization.

BofA CEO Ken Lewis attributed speculation about the government taking over his institution to a "lack of understanding" regarding the company's operations.

"Our company continues to be profitable," Lewis said in a statement. "We see no reason why a company that is profitable with strong levels of capital and liquidity and that continues to lend actively should be considered for nationalization.

Investors dumped BofA shares in droves Friday, sending shares tumbling about 20 percent.

Still, Lewis held resolute about his bank's position.

"Speculation about nationalization is based on a lack of understanding of our bank's financial position as well as a lack of appreciation for the adverse ramifications for our customers and the economy," he said.

Meanwhile, two sources close to Citi said the bank has not held talks with the U.S. government about nationalization.

The U.S. Treasury has not disclosed much more to Citigroup than it has to the broader public about its plans for the banking sector, the people said.

Rumors of nationalization hammered U.S. bank shares on Friday.

Bank stocks added to earlier losses following statements from Sen. Christopher Dodd indicating that while the government would prefer to avoid it, nationalzing some banks was a possibility.

Separately, the White House said privately held banks are preferable, and that it wants to ensure that the system is sufficiently regulated.

"Let me reassure as best I can on banks," White House spokesman Robert Gibbs told a news conference. "This administration continues to strongly believe that a privately held banking system is the correct way to go, ensuring they are regulated sufficiently by this government.

"That's been our belief for quite some time and we continue to have that."

-- Reuters contributed to this report.

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