• Something Something Citigroup Nationalization Something! Something Probably Bad!

    citigroupThe government has given Citigroup billions in bailout funds, and now it's looking at acquiring a 40% stake in the tanking bank. Forty percent?! That counts as nationalization, right? Oh my God, the Swedes have won. Quick, everybody act blonde!

    Wait — breaking news. Here's a statement from the Fed, the Treasury, and some official-sounding "bank regulators" about a new capital assistance plan to keep banks afloat. This better explain everything, in unconditional terms everyone can understand…

    "This additional capital does not imply a new capital standard and it is not expected to be maintained on an ongoing basis," the regulators said in their statement, in wording designed to signal that this wasn't bank nationalization.

    The regulators closed their statement with even more explicit language that tried to calm markets' fears that the government of the world's largest economy might be forced to take over private banks: "Because our economy functions better when financial institutions are well managed in the private sector, the strong presumption of the Capital Assistance Program is that banks should remain in private hands."

    Blah blah "not expected to be maintained"? A "strong presumption" that banks "should" remain private? Uhh, sorry, that sounds awfully vague and conditional.

    Financial markets should have seen the announcement as positive, but the administration's lack of a coherent message to explain what it meant and how it works sent the Dow Jones Industrial Average almost 100 points into negative territory by midday.

    There you go. Now that's what I call an unequivocal statement.


    Tags: Banks, Citigroup, Economy

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