Saturday, February 21, 2009

Banking: U.S. Treasury Department denies plans to nationalise banks

The Obama administration said Friday it is not trying to take over Citigroup Inc. and Bank of America Corp., two ailing financial institutions, Xinhua News Agency informed.

"This administration continues to strongly believe that a privately held banking system is the correct way to go, ensuring that they are regulated sufficiently by this government," said White House Press Secretary Robert Gibbs.

"That's been our belief for quite some time, and we continue to have that," he said, rejecting market rumors of impending nationalization of troubled banks.

On Wall Street, Citigroup plunged 20 percent while Bank of America dropped 12 percent in afternoon trading as rumors of nationalization prompted investors to sell.

A Treasury Department spokesman also rejected the rumors on Friday.

"There are a lot of rumors in the market, as always, but you should not regard these as any indication of the policy of this administration," said the spokesman.

As Treasury Secretary Timothy Geithner has said, "we will preserve a financial system that is owned and managed by the private sector," he said.

The U.S. government has already provided significant aid to Citigroup and Bank of America in its efforts to save the nation's financial sector, which has been choked by bad assets.

Source: FOCUS Information Agency

Published by Mike Hitchen, Mike Hitchen Consulting
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