Pros Say: Govt Should Break Up Citigroup (UPDATED)
Stocks ended mixed in choppy trading on Tuesday after 10 banks were approved to repay TARP loans. The companies are expected to give back some $68 billion, about twice what the government expected. Read and listen to what the experts had to say...
Time to End TARP?
The banks are finding it so onerous to be involved with TARP that they want to give back money as quickly as possible and be free of "these government shackles," said Bert Ely of Ely & Company.
Ely said Wells Fargo and Bank of America will get out intact.
On the other hand, he said GMAC may be liquidated while Citigroup will face downsizing.
“But that doesn’t mean any of them are going to fail in the sense of being taken over by the FDIC,” he said.
Breaking Up Citi is the Way to Go
Citigroup is in desperate need of change and the change will have to come from the government, said William Smith of SAM Advisors. He suggested breaking up the company: “Although the company as a whole is dysfunctional, Citigroup is unbelievably valuable if you look at the pieces.”
Should the FDA Regulate Tobacco?
Rich Masters of Qorvis Communications said the FDA needs to impose a regulation on tobacco. “This has been needed for years — even some of the tobacco companies are backing this up,” he said. He said the regulation will help increase the health of Americans and give the FDA control over the products.
Educating Africa’s AIDS Orphans
Peace House Africa is a U.S.-based non-profit organization founded by Scott Augustine in Tanzania that provides education, technology research and business development to aids orphans. Augustine said the organization provides financials support to over 500 orphaned children.
Short and Build Cash on Junk Companies
“If Fed rates continue up much further, it will have a significant effect on the equity market,” said Harry Rady of Rady Asset Management. He said the equity market is vulnerable and there are many opportunities to short and build cashon second and third tier "junk" companies.
US Will Be ‘First Out of Trouble’
The U.S. market was “first in trouble and will be first out of trouble,” said Brian Belski of Oppenheimer. He said America's economy and markets are at least 12 to 18 months aheadof other markets, with respect to the recovery in terms of fiscal and monetary policies.
Interest Rate Worries Continue
Former Federal Reserve Board governor Frederic Mishkin said that there’s a problem for both the monetary policy and the economy going forward. He said people are worried that when the Treasury dumps their debt in the future, interest rates will increase which will lead to higher mortgage rates.
US Will Beat China to Recovery
Roger Nightingale from Pointon York said he believes the US economy is “looking the best in the world at the moment” and that the idea the Chinese economy is stronger seems “bizarre.” He said the US will see some growth in 3 to 5 months.
Hyundai on Potential Chinese Competition
John Krafcik of Hyundai USA said he is not worried about Chinese brandscompeting for market space in the U.S. “It took us 23 years to get to where we are right now—we’re the 5th largest auto company in the world, 7th best selling brand in the U.S.—but we still only have a 4 percent market share. So imagine how long it will take Chinese car brands to catch up. If they do come to the U.S., we think it will come through existing channels,” he said.
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