Chris Whalen of Institutional Risk Analytics.

via Yahoo Tech Ticker, Feb 18, 2009

“Nationalization” is a poor word to describe the process. “Receivership and restructuring,” along the lines of what the FDIC did with WaMu, is the right way to think about it.

Category: Bailouts, Credit, Video

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

3 Responses to ““Nationalization” of Citi and BofA Inevitable in ’09”

  1. ben22 says:

    Truth, enough said.

  2. carol7 says:

    Nice interview.

    Though I dislike to quote Greedscam, he may have the ears of the men at the power buttons.
    In a recent interview with the Financial Times, he admitted that nationalization might be inevitable. Whereas you mention that bondholders have to accept a significant haircut (50%), Greedscam does not agree.
    ”You would have to be very careful about imposing any loss on senior creditors of any bank taken under government control because it could impact the senior debt of all other banks,” he said. “This is a credit crisis and it is essential to preserve an anchor for the financing of the system. That anchor is the senior debt.”

    Yves Smith mentioned on her blog that he is an advisor to Pimco. You mention that a lot of banks have each others bonds. I also read that GoldmanSachs´ CEO was with Tim Geithner when he bailed out AIG for the second time (the announcement resulted in a headline on the Wall Street Journals’ website that GS was the big winner of that bailout; later changed to more neutral wording).

    The financial powers that be will fight against your proposed restructuring; they will try to save themselves, their bondholdings and have taxpayers take the losses. Until now Turbo Tax Geithner has shown himself to be more in tune with Wall Street, than with those who do pay their share of the taxes.

    The direction of the trial balloons might be telling.

  3. cdskiller says:

    Geithner cannot manage the inevitable move to nationalization. He has painted himself into a corner. He has not credibility left, and he will resist the difficult moves every step along the way, which only make matters worse. He will also attempt to protect senior bondholders at the expense of taxpayers, which will cause outrage and delay and greater damage to markets in general. He should resign immediately. Replace him with Whalen.