BofA, Citi shares fall on nationalization fears.
Bank of America Corp and Citigroup Inc shares plummeted for a sixth straight day on Friday, hammered by fears that the U.S. government could nationalize the banks, wiping out shareholders.
Bank of America shares were down 19 percent to $3.20 in early trading, their lowest level since 1984, while Citigroup shares fell 20 percent to $2, their lowest price since the early 1990s.
Both stocks have lost more than 90 percent of their value in the last year.
“It’s a clear sign that the markets are expecting a high probability of them being nationalized,” said Mike Holland, founder of Holland & Co. “The clear expectation is that shareholders would effectively be wiped out.”
The KBW Financial index was down 6.8 percent to 20.42, with Wells Fargo Co shares down 11.6 percent to $10.60, and J.P.Morgan Chase & Co shares down 6 percent to $19.39.
I’m not really sure what I think about this. On the one hand, temporarily nationalizing the banks might not be such a bad idea, but on the other hand, are there really any companies that are “too big to fail?” Not suggesting that these particular companies are about to fail, of course, but this article did bring that question to mind.
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