More Videos
- US Bonds Pare Losses After 7-Year Auction
- New-Home Sales Jump to Highest Level in Over Year
- Judge Erases Couple's $525,000 Mortgage Payment
- Claims Level Suggests End to Job Losses
- Consumers Catching the Holiday Spirit
- Airlines Hit With Penalties for Stranding Passengers
- Consumer Mood Improves, but Anxiety Over Finances
- Jobless Claims Below 500,000, Durable Orders Slip
- US Said It Will Reduce Emissions by 17% by 2020
- It's Beginning To Look A Lot More Riskless
- Crescenzi: Claims Level Suggests End to Job Losses
- Hedge Funds Take Early Lead in Warren Buffett's 'Big Bet'
- S&P Stocks Trading at New 52-Week Highs
- 4 Food Stocks to Stuff in Your Portfolio: Analyst
- S&P at 1050-1200 Trading Range Next Year: Strategist
- Treasury On Mortgage Modifications
- Blue Jeans Expected to See Another Green Christmas
- Investors Thankful for Gains This Year
MOST SHARED
- Ritz-Carlton ?Struggling? in the US: President
- Garlic Price Rises Surpass Gold, Stocks in China
- Half of Banks' Losses May Still Be Hidden: IMF Head
- New-Home Sales Jump 6.2% To Highest Level in Over Year
- Oil Price to Average $75.40 in 2010: Poll
- Jobless Claims Below 500,000, Durable Orders Slip
- Americans Ditch Planes for Trains this Thanksgiving
- The 'Real' Jobless Rate: 17.5% Of Workers Are Unemployed
- Consumer Mood Improves, But Anxiety Over Personal Finances
Text Size 
The White House and Treasury Department late Friday sought to shoot down persistent rumors Citibank and Bank of America are about to become wholly owned subsidiaries of Uncle Sam.
The White House said it strongly believed in a privately held bank system, after rumors that the U.S. government could nationalize banks saw shares in Bank of America [BAC
Loading...
()
] ] plummet to shares fall to fresh lows.
 |
"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."
The White House spokesman's comments helped lift U.S. stocks from their lows of the day, traders said. The Nasdaq Composite index briefly turned positive, and the Dow Jones industrial average and Standard & Poor's 500 index both cut deep losses.
Separately, Treasury spokesman Isaac Baker said in a prepared statement that there are rumors in the market, but they should not be regarded as an indication of the administration's policy.
"As Secretary (Timothy) Geithner has said, we will preserve a financial system that is owned and managed by the private sector," Baker said.
Earlier Friday, executives at both Citigroup and Bank of America both said they are not in danger of nationalization. But the comments did little to soothe markets.
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 shares in droves Friday, sending shares tumbling about 20 percent. The stocks had been weak, but sunk lower after statements from Sen. Christopher Dodd indicating that while the government would prefer to avoid it, nationalizing some banks was a possibility.
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.
Slideshow: Bank Failures of 2008
—CNBC Senior Economics Reporter Steve Liesman and Reuters contributed to this report.
Print
Email
- Here's how key provisions of the health care reform bill would impact your insurance and how you'll pay for it.
- Remember when auto shows were major events where new models could generate buzz?
- It may be the most unusual guide to business you'll read.
- After nine years the NBA’s minor league equivalent is finally coming into its own.
- Bill Griffeth is taking a leave of absence from CNBC and Power Lunch for a year. Here's a message from Bill.
- For nearly three decades, these on-call experts have been dishing advice on how to – and not to – cook turkey.
Data is a real-time snapshot *Data is delayed at least 15 minutes