Sen. Dodd regrets comments on bank nationalization
From the Loose Lips Sink Stocks Dept.: Sen. Chris Dodd is apologizing today for his comments Friday suggesting that it might be necessary to nationalize some banks for a short time.
The Connecticut Democrat, who chairs the Senate Banking Committee, told reporters in Washington that he was surprised by the market’s reaction.
Dodd said his statement Friday "should have been better thought-out at the time. I didn’t realize it was going to have the reaction it did," according to Bloomberg News.
And just so everyone knows where he really stands on nationalization, he said: "I think banks run by private hands are far more desirable."
In an interview Friday on Bloomberg TV, Dodd said that although he wouldn’t "welcome" the government taking control of some banks, "I could see how it’s possible it may happen. I’m concerned that we may end up having to do that, at least for a short time."
Given the rumors flying last week about the government pumping more money into major banks and wiping out shareholders in the process, Dodd’s comments Friday helped drive Citigroup Inc. as low as $1.61, a new bear-market nadir. The stock closed at $1.95, down 56 cents, or 22%, for the session. Bank of America Corp. fell as low as $2.53 on Friday before recovering to close at $3.79.
Today, the banks are rallying for a second straight session, leading a sharp rebound in the battered market overall. Federal Deposit Insurance Corp. Chairwoman Sheila Bair reiterated that regulators favor "private control" of financial institutions, and Federal Reserve Chairman Ben S. Bernanke also sought to downplay nationalization talk. President Obama is expected to say something about the banks in his speech to Congress tonight; regulators on Wednesday are set to begin "stress testing" major banks to determine whether their capital levels are adequate.
All in all, Wall Street has had enough with bank-bashing for the time being: Citigroup was up 27 cents to $2.41 about 12:20 p.m. PST; Bank of America was up 76 cents to $4.67. A key index of big-bank stocks was up 11% for the session.
I'm sure the people who sold Citi at $1.61 on Friday and BofA at $2.53 would like to speak personally with the senator about his regrets.
-- Tom Petruno
Photo: Sen. Chris Dodd. Credit: Matthew Cavanaugh / EPA