Word: bankes
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Dates: during 2000-2009
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...monstrosity that the stock market has made it out to be. It may cut its dividend or lose its precious credit rating. Its financial service businesses may post large loses. But, it should not trade like a money center bank that the federal government is about to nationalize...
...Just like Detroit, Bank of America (BAC), and Citigroup (C), AIG is playing a game of chicken with Washington that the government does not feel it can afford to lose. Imagine what it would be like if all of these businesses failed at the same time. (Read a TIME story on why the government wouldn't let AIG fail...
...Bank nationalization is the phrase on everyone's lips at the moment - with Alan Greenspan, Chris Dodd and Paul Krugman among the leading lights of the unlikely coalition in favor of it, and members of the Obama Administration repeatedly denying that it's in their plans. It's a misleading debate, though, given that the U.S. banking system was effectively nationalized on Oct. 13, when then Treasury Secretary Henry Paulson called the heads of the country's nine biggest banks into his office and told them they couldn't leave the room before agreeing to sell shares to the government...
...head of the former line is beleaguered giant Citigroup, which is currently negotiating with the Treasury Department to swap common stock in the company for some of the $45 billion in preferred stock that the government has purchased so far to shore up the bank's finances. The advantages for Citi are that it wouldn't have to pay dividends on the common stock, and certain capital ratios would improve. In return, the government would get more of an upside if Citi were to return to health, plus effective control of the company. Whether the government's stake would rise...
...financial panic, markets for certain assets simply stop functioning, and relying on market prices to determine the health of banks would simply mean succumbing to the panic. Then again, relying on bank executives to accurately price their own assets is no good either. Treasury Secretary Tim Geithner hopes to get around this by jump-starting a market for troubled mortgage securities, but he hasn't decided yet how exactly to do that. For the moment, determining the health of banks remains a government judgment call...