“If you thought Lehman Brothers was a mistake, just standby and see what nationalizing Citi or BofA would do.”
Those dire words come from William H. Gross, who manages the largest bond mutual fund in the United States as the co-chief investment officer for the Pacific Investment Management Company.
In his March investment commentary, posted Tuesday on Pimco’s Web site, Mr. Gross weighed in on the great debate over whether troubled American banks should be taken over by the government. (In what we think is an unrelated development, he also talks about the disappearance of his mustache.)
Holders of bank shares, such as Citigroup and Bank of America, are watching the nationalization debate closely, because a government takeover would probably leave them wiped out, or at least severely diluted.
In arguing against nationalization, Mr. Gross takes aim at some notable figures — specifically Nouriel Roubini, the economics professor at New York University who predicted much of the current financial crisis; Christopher Dodd, the chairman of the Senate Banking Committee; and Alan Greenspan, the former chairman of the Federal Reserve.