Citigroup, Bank of America ‘Nationalized’ as U.S. Calls Shots

Citigroup, Bank of America ‘Nationalized’ as U.S. Calls Shots

Bloomberg News, 1/23/09

As I said a few months ago the feds nationalized the banks, but failed to stop the Panic, and in the process destroyed the U.S. (and global) financial system. That prediction continues to unfold. What we have is worse than nationalization in that the feds, but especially Congress, can mismanage without accountability. That too is unfolding: yesterday's WSJ reported that Barney Frank directed TARP funds to his home-town bank, and today, Obama weighed in on compensation. Next, they'll start directing to whom banks will lend, or not lend.

The entire regulatory structure must be replaced in order to have any credibility, but that's not likely to happen -- not constructively, anyway, not by this crew. We've gone beyond 'collateral is the contagion' (which is still there) but the MTM spiral has only paused, not abated.

JRB

1/23/09