Tags: britian | nationalization

Britain May Nationalize Banking System

By    |   Friday, 23 Jan 2009 08:42 AM

As the pound continues its free-fall against the dollar — down by nearly a third in a year — rumors run wild that U.K. banks are headed en masse into the arms of the government.

It’s the kind of talk that tends to turn into reality, much like any bank run. Cratering bank stocks led members of parliament on Wednesday to call on the government to outright nationalize Royal Bank of Scotland (RBS) and Lloyds Banking Group.

“It’s scary. It reminds me of what you could find in southern Europe 15 years ago, during the worst years in Italy or Greece,” Gilles Moëc, senior economist with the Bank of America in London, told The New York Times.

The British already put $51 billion into banks in October and last week doubled down with a huge, new $740 billion rescue plan. It owns nearly half of Lloyds and 70 percent of RBS already. The U.K. previously nationalized mortgage lenders Northern Rock and Bradford & Bingley.

Barclays, according to published reports, might end up under the control of Middle Eastern investors.

The bad news abroad added to the pain in U.S. markets. The Dow opened well under 8,000 on Friday on poor GE earnings and news of Bank of America's struggles with its planned takeover of Merrill Lynch.

China bull and commodities guru Jim Rogers earlier in the week said the U.K. is “finished” and urged investors to dump the pound.

“I would urge you to sell any sterling you might have,” Rogers said, reported Bloomberg.

“It’s finished. I hate to say it, but I would not put any money in the U.K.”

Some experts have argued that even U.S. banks should be nationalized.

Arthur Levitt, a former Securities and Exchange Commission (SEC) chairman goes a step farther: He says U.S. banks will be nationalized.

“Clearly we’re moving toward nationalizing banks,” Levitt, a senior adviser to private equity firm Carlyle Group, told Bloomberg TV.

The government has to choose winners and losers among the banks, Levitt says. “Nothing less will work.”

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As the pound continues its free-fall against the dollar — down by nearly a third in a year — rumors run wild that U.K. banks are headed en masse into the arms of the government.It’s the kind of talk that tends to turn into reality, much like any bank run. Cratering bank...
britian,nationalization
337
2009-42-23
Friday, 23 Jan 2009 08:42 AM
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