Business
Nationalization fears drive down bank stocks
Bank of America shares withered for a sixth straight day on Friday — but it could have been a whole lot worse.
During a raucous trading day, comments by the White House supporting “a privately held banking system” helped rescue financial stocks battered by persistent speculation that the government could nationalize struggling banks, a move that would likely wipe out existing shareholders.
“This administration continues to strongly believe that a privately held banking system is the correct way to go, ensuring they are regulated sufficiently by this government,” White House spokesman Robert Gibbs told a news conference. “That's been our belief for quite some time and we continue to have that.”
Asked whether his remarks left any room for a government takeover of banks, Gibbs added: “It's hard for me to be clearer than where I just was.”
Bank of America shares closed down 3.5 percent at $3.79, after falling below $3 earlier in the day and later eclipsing $4. For the week, the stock lost nearly one-third of its value. Shares of other large banks, including Wells Fargo, Citigroup and JPMorgan Chase, also suffered ragged trading sessions that left them down for the day – with Citi diving more than 22 percent to $1.95.
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