While bank stocks are rebounding today…..
There’s a lot going on behind the scenes that really could change things going forward. Let me lay out a couple of thoughts:
- The overall direction of the stock market shows, in my opinion, that the markets don’t like the Citibank cash infusion plan that it looks the government is going to implement.
- On Wednesday, the government is going to announce their “plan” for hopefully putting an end to the problem of confidence in the banking sector. Here’s hoping that it will be more specific than their past announcements and will actually address the issues.
- There are a lot of questions about what nationalization of banks would entail, very few answers and lots of opinions.
Stay tuned,
Stress test could lead to some bank nationalization – MarketWatch
WASHINGTON (MarketWatch) – As part of the latest efforts by regulators to stem the financial crisis, U.S. regulators are preparing another round of capital injections to financial institutions that fail to pass a new government stress test or obtain private financing.
As the Treasury and other bank regulators consider how many funds to provide to troubled financial institutions, regulatory observers argue that failure to pass the stress test could lead to a wide variety of infusions, with some extremely troubled institutions being nationalized by government bank agencies. Details of the plan, which could also include forced mergers, are expected to be released Wednesday.
Tom,
Since the (now) President won his party’s candidacy in October, the stock market has fallen by 50%. It doesn’t matter what bank stocks (as an industry) do on any given day. Investors, in total, have already shown their “confidence” in the country’s political leadership – and it isn’t pretty.
At least he didn’t say “In five years, you’ll be blown away”. Actions speak louder than words, anyway. He’s shown it, and investors have shown it in response.