February 20th, 2009
09:03 PM ET

Evening Buzz: Bank Fears

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/images/02/20/t1home.wallstreet.gi.jpg]
Maureen Miller
AC360° Writer

It was a brutal day on Wall Street. The Dow closed at a 6-year low, down 100 points to finish at 7,365.67. A lot of people are asking: How low will it go? It's anyone's guess.

But there's no guessing as it what caused today's roller coaster ride. Stocks tumbled on worries over the economy and talk that the government might have to nationalize some of the biggest banks. Such a move would wipe out shareholder value, which is why you saw a lot of bank stocks taking hits today.

Dow components Bank of America, Citigroup , JPMorgan Chase and American Express all fell though out the afternoon. But by the close, all except Citigroup managed to cut losses.

Here's what's fueling the wild ride: Senate Banking Committee Chairman Chris Dodd, D-Conn., said that short-term takeovers of banks may be necessary. However, the White House is not in favor of such a move.

Do you think banks should be nationalized? We'd love to hear your thoughts.

Tonight, we're also looking at how America's mayors are trying to get a slice of the $787 billion stimulus plan. But several GOP mayors are vowing to refuse some of the funds for their states. Other GOP mayors who publicly opposed the plan now have no problem taking the cash now that the bill has been signed into law. We'll have the raw politics.

Join us for these stories and more starting at 10pm ET.

Filed under: Maureen Miller • The Buzz
soundoff (72 Responses)
  1. Zyworski

    I am so disgusted with the banks that have taken our money, then used it as investment capital for themselves instead of making loans to the people. If it were my decision to make, at the slightest default I would chain the doors and turn their assets over to the RTC or its equivalent for liquidation, no questions asked, no debate. Once receivership happens a few times the rest of the banks will fall in line. Bankruptcy was always an option that our fathers favored for negligent and corrupt management. I am thoroughly opposed to giving them one more red nickel.

    February 21, 2009 at 2:21 am |
  2. YD from Pittsburgh

    Nationalizing the banking system is not an answer, and we do not need socialism in this country.

    February 21, 2009 at 2:14 am |
  3. martin morales

    Hello Again:
    Sorry to bother you again tonight, but I watch your show at least 2 times nightly. One expert on another show said that Alan Greenspan was for nationalizing banks because he has a close friend that shorts bank stocks. I never liked AG and never trusted him.
    Also, the 4 eyed young punk on your show tonight blamed the bank managers for the loose loan policies. However,even as I was, I said was, a Bush supporter, it was his policies, that forced the banks to loosen credit, so he would get credit for allowing more people to have the American dream under his administration. Again, the unscrupulus mortgage brokers like the one in Orange County CA ,making loans without documentation should also be held accountable and prosecuted. I know a small fry mortgage broker, who I have invested with, and I can tell you some stories that would curl your hair, if that's possible. If you are interested, let me know. Unbelieveable!

    February 21, 2009 at 2:11 am |
  4. Patricia Moore

    I would like to know that once a bank has become nationalized, will its employees become government employees? Or will the associates see no change at all.

    February 21, 2009 at 1:57 am |
  5. Kimo, WA

    Experts on your panel tonight along with the administration are stating to hold off nationalizing the banks – let private investment money help put more money into them. Big dream! We are already tapped out to the max. Bank stocks were key sources of steady retirement income and were added to my portfolio for years. Now, in a few months the income stream has dried up, the portfolio dropped 80% and it is time to stop all spending except for critical needs. Have pulled all savings out of banks and stashing them elsewhere.

    To date nothing has been done to the CEOs, Board of Directors, and Madoffs of the world whose stupidity and greed caused the mess. It is the average individual now really suffering and will pay the bill for decades to come. Glad I only have a decade or two left to live.

    February 21, 2009 at 1:53 am |
  6. Kimo

    BAC has already wiped out retirement funds for many seniors who had faithfully followed the 'buy and hold' advice of stockbrokers. BAC was the 'great dependable dividend income provider'. Nationalization will be the final blow so be prepared for seniors committing suicide across the country, or blowing up branches of BAC and CiTi!

    February 21, 2009 at 1:39 am |
  7. Gerald Chinnappan

    Hey AC!! yo sand in the midst of the storm, Hurricane & tornado why dont you speak out when there is a earthquake in the US citizens heart???

    February 21, 2009 at 1:35 am |
  8. Digger

    The large banks should suffer the consequences of their actions. And not be bailed out by the Government. I have money in Bank of America and Citi corp. If they go under, then I to shall suffer the consequences. I feel bad for those people that would loose every thing, but there are other safer institutions they / we could choose.

    February 21, 2009 at 1:30 am |
  9. J.V.Hodgson

    Nationalising the banks is not the answer.
    The government alone if necessary taking over toxic assets is, because that is the easiest and quickest way to get banks back in lending mode = geting thier liquidity ratio's above where they, under Financial regulation, must be.
    Consequence however is some people are going to get hurt and the Previous "Bad loan practices" will go and bank rules for lending tighter, if not you just create a potential crisis all over again.
    One other point banks must Foreclose on very Highly leveraged loans to the more risky Hedge Funds. Madoff and mini Madoff are simply the tip of the iceberg. Point is some peoples 401k's will be hurt by the "risky Hedge fund foreclosures" but thats the price of greed!

    February 21, 2009 at 1:29 am |
  10. Tim

    I have not heard anyone talk about the former Merryl Lynch Board Members that were recently rehired onto the Bank of America Board and then were given thousands of Stock Options when Bank of America stock price was at the lowest annual price. Were these same board members in on the bonus scam?

    February 21, 2009 at 1:20 am |
  11. John, Atlanta

    If you want to see what happens to a nationalized bank, try to get a loan from the banks the FDIC takes over. The bureaucracy is impenetrable and no one will make a decision without countless memos, position papers, etc. The loans that are current don't get serviced, the borrowers that need money don't get any, and the losers that caused the bank to go under get their loans discounted. On top of that the good loans are pooled and sold via a middleman at a discount.

    Nationalize the big banks and commerce goes back to the stone age. I'm sick and tired of all these Wall Street and D.C policy types give their blowhard opinions without having a point of reference as to what the rest of America goes through. Clark Howard should stick to telling people to invest in Vanguard S&P 500 funds or credit union CDs. He knows nothing about how banks work on the commercial side.

    February 21, 2009 at 1:17 am |
  12. Michael Zimmerman

    Right now banks are allowed to generate a profit and the US government is giving them money. That is ridiculus.

    We need low interest rates on secured and unsecured loans.
    We need low interest rate on credit cards.
    We do not need banks generating profits on US government money.
    I favor nationalization.

    February 21, 2009 at 1:12 am |
  13. Richard Curtis

    Finally, one of your guests got it right. Let FDIC do its job. They will take over the banks, remove bad assets, sell the bank, and then auction the bad assets, both recovering SOME of our money.

    February 21, 2009 at 1:11 am |
  14. Alexandra O.

    It is my opinion that the general population has been seduced into buying into the inflation via adjustable mortgage rates, etc. Now instead of a bail out for the banks/lendors, the government should just let them fail. Let them collapse. That, in turn, may pave the way for better, more integress alternatives in the years to come.

    February 21, 2009 at 12:46 am |
  15. Sam

    Leave the bankers & politicians, i get mad even when i look around. I see people who were greedy, who wanted $$$$ houses with swimming pools, expensive cars and vacations. They got the house prices up. I couldnt buy any house because i wanted to be responsible and not go for a house whose mortgage payment is not propotional to my income. This continued for a very long time even before economy started slowing down. As a responsible person, i rented a house and started saving extra money in my 401k. Now my savings of years in 401k are all gone. I hear these squealers crying out loud when they are loosing houses. I say they deserve to loose their house. Infact, they should be punsihed for the greed & stupidity and not bailed out like bankers and politicians. If its humanitarian to bail out these squealers, then government should give back what i lost in years of renting apartment & 401k

    February 21, 2009 at 12:29 am |
  16. Jim

    The banks should NOT be nationalized. I suggest you reread the excellent points made by Isabel in Brazil and Dave Autrey.

    There is a definite probability that the goverment would not be less effective. This would be a strong move toward socialism. Also, remember government forced banks to make unqualified subprime loans!

    February 21, 2009 at 12:22 am |
  17. Agalag

    Here we go! The Democrats and their big goverment! How will the we pay for all of this while supporting 2 wars? Obama has realized that the pulling out from the Middle East isn't going to be as quick or as easy as he thought. Granted, the nationalization of ALL of our banks is a good idea for now, just so we can once again get affordable mortgages–not to mention the legions of 25 y.o. bank V.P.s whose jobs could be eliminated. Most banks could do without a quarter of their employees with no problem. They have no problem laying off the 55-60 year old experienced employees, so they can hire a kid fresh from college to do the same job for $30,000 less but with little experience. Unfortunately, this recession is just beginning. It will take serious economics experience to get us out of this mess, and I hope that Obama is up to the task–or finds a democrat that has paid their taxes that he can appoint as a "Recession Buster". An Alan Greenspan type of person...

    February 21, 2009 at 12:19 am |
  18. O T Nelson

    AC: Your Money Summit was in a style that is not conducive to helping in the resolution of our economic problem. The moderator had the aura of a "know-it-all". This was exacerbated by his use of the smart board as if he were Mr Russert at the 2000 exection. There were no substantial economists on the panel. The talking was much too fast-paced. Do you really believe that this style can help us understand and deal with these problems? You should view our problem as a patient who has a serious health problem who wants to get several second opinions from doctors who have some reason to be near-experts on our kind of problem. You would not want each doctor to treat you like the moderator treated us. finally, you would want a trusted friend to discuss these second opinions with you in less than a manner displayed by your moderator. I appreciate your work, but believe that you can do better. Please continue your efforts.

    February 20, 2009 at 11:59 pm |
  19. O T Nelson

    AC, in discussing nationalization of banks on AC360 on Feb 20 you were less than explicit about what you meant by nationalization of banks. Let me make a specific definition: take over the big banks with toxic assets (banks that are insolvent when the toxic assets are valued at today's value). Use the FDIC or a similar entity as in the S&L debacle. Remove the top management of each bank taken over.Once a bank is taken over, go in and look specifically at all assets. Determine which assets are toxic. Remove these assets to one large bad bank (like the Resolution Trust Corporation in the S&L case). Have that entity liquidate these toxic assets. Split up the remaining good bank. Offer each piece as a new bank to private investors. Let the new owners appoint their own management. This formulation avoids the issue that claims the government cannot run a bank.

    February 20, 2009 at 11:41 pm |
  20. Larry L.

    The Democrats said they were going to hit the ground running that was an understatement,in just over one month the new administration has turned our economy from a recession into the beginning of a depression,with a socialistic monetary system.

    February 20, 2009 at 11:16 pm |
  21. Henry

    I'm begining to take offence by criticisms that the stimulus bill is penelizing those taxpayers who have been responsible. They should understand they allowed the Republicans to squander a large surplus and run up the national debt for our children's children ... they spent the money, Obama is just stuck paying the bill.

    February 20, 2009 at 11:13 pm |
  22. Emma, Ashtabula, Ohio

    David Gergen, a question please. I am 67. I do not remember when growing up so much spin from so called news stations. I mean the guy at the beginning of Ali's segment. He talked to his child about the stimulus.
    How, Mr. Gergen, can we solve any of our serious problems with so much spin and lies being sent out on our airways.
    I believe the people are trying to get good information on how to survive, we get spin.
    Why are states laying off state employees who pay taxes insted of corporate contractors who hire slave laborers and get tax abatements? Get rid of the market based government. What do you think?

    February 20, 2009 at 11:11 pm |
  23. Pat Long

    i beleive the nationalization of banks is just the first part. You read whefr financial houses are hired physicist and mathematicians to model future moves in assets values which are really modeling the unknown. the goverment needs to lay down some rules about how "eclectic" methods can be. This is what caused the dwonfall of some of the big finance houses.

    February 20, 2009 at 11:09 pm |
  24. Jamii

    I believe that vouchers given directly to the people for the bank that they owe would be a better deal then giving it to the banks or bailing out the corporations.

    February 20, 2009 at 11:06 pm |
  25. Cajun Chris

    Close down the socialist instruments Freddie Mac and Fannie Mae and throw anyone who designed them, promoted them, and protected them out of gov't and maybe in jail

    February 20, 2009 at 11:04 pm |
  26. Emma, Ashtabula, Ohio

    From your last segment Anderson it sounds like the business preditors are out ahead of Pres. Obama. I follow corporate crime in government and non-profits. The fines these corporations receive for the crimes of bribery, racketering and fraud appears to be written off as the ‘cost of doing business’. My question is to Ali and others. Is there any such thing as illegal fraud, racketeering and extortion in the 21st century version of free market economics where all these criminals go to jail?

    February 20, 2009 at 11:02 pm |
  27. jim

    What about the brokers fees, insurance costs, and all the other high fees charged or overcharged, some legal some not that found there way into the stock, bond, and other markets which pay the salaries of people like this guy Rick of cnbc, and will he pay any back to the orignal source if traced back through his salary??????


    February 20, 2009 at 10:56 pm |
  28. denis stergiotis

    The Banks are foreclosing on Americans Homes ....
    These same Banks want American Taxpayers to bail them out

    Banks want help from American Taxpayers yet they won't help Americans that are losing their homes!

    What is good for the Goose is good for the Gander!

    February 20, 2009 at 10:54 pm |
  29. Kathy

    Let the banks either find new ways of doing business or let them fail. Look around at most business' they have all come up with new ways to invent themselves, offering new services, thinking outside the box, trying to keep there customers by doing things that benefit the customer which in turn helps the business. Business as usual is not working. It's time to pay the piper. Get back to good old customer service. Do what is right for the customer and they will do business with you. Value there business instead of the penalties that seem to apply to so many banks these days. They don't need to be nationalized they have been screwing their customers for years now it's time to value them. Put the customers interest first instead of there own. Small banks seem to be doing fine, why do you suppose that is. They don't live beyond their means and know when something smells bad. I understand the implications of letting some of these banks fail, but there are others waiting in the wings to fill the voids.

    February 20, 2009 at 10:45 pm |
  30. Jim,California

    I took my money out of Banks a long time ago. You think I'm stupid enough to put my money in a bank controlled by our government?
    The Same Idiots that couldn't find their behinds with both hands in broad daylight & that got us into this mess in the first place?

    February 20, 2009 at 10:44 pm |
  31. Cheryl Sykes

    I think banks should be nationalized. Government could manage banks better than they have been managed.
    Why doesn't BOA get investigated for all their mismangement and fraudulent wholesale mortgages? All Ken Lewis, BOA cares about is money – not customers. I have had a fraudulent lawsuit against BOA and they are trying to foreclose not help me. They will not help homeowners. WHERE DID THE $40 BILLION GO?? Not to homeowners. BOA is only going to help Countrywide because they were sued by homeonwers and homeowners won.

    February 20, 2009 at 10:43 pm |
  32. Dick Galle

    What happens to bond holders if a bank is nationalized, eg Bank America?

    February 20, 2009 at 10:43 pm |
  33. Lola

    Your commentators talk about stockholder making bad investments – banks like B of A employee thousands of people. After 30 yrs+ with
    B of A, my 401k is worthless and I'm paying $1200 a month for health insurance. The emphasis has shifted from health care to banking, and that certainly isn't fixed yet. We're not all "rich" executives!!

    February 20, 2009 at 10:39 pm |
  34. Frank in Tucson

    We talk about bailing out banks who made bad decisions that got them, and us, into this economic trouble.
    We talk about bailing out Wall Street who's greed helped us get into this economic trouble.
    We talk about giving more bail out money, our tax dollars, to banks that used the previous money to buy other banks instead of creating viable lending programs.
    We talk about bailing out our auto industry who made bad decisions about the development of future cars.
    But when we talk about helping homeowners, we get knee deep into a discussion of what's unfair? The people who are concerned about their neighbors getting help and not them, should be worried about the big institutions getting massive help and the rest of us has to pay the tab. This argument is a smoke screen. Most people got here not due to overpurchasing, but the bottem dropping out of the housing market combined with a massiive rise in unemployment. The fact that some may have overbought should not cloud the reality that most people of victims of the same institutions that are getting our help without the requirement of owning up to their responsibility.

    February 20, 2009 at 10:37 pm |
  35. Mircea

    Now, US (and worldwide) private banks are almost frozen. In this reality there are two difficult choices:
    1. Nationalize solely the banks that are in financial distress for a restricted time (up to about 5 year). Do not play with our money and future just because you hate this word.
    2. Organize a Federal US Bank, controlled by the state, which will compete with private banks and stop any bailout. This will clean the financial landscape (through competition) with reduced costs.
    COMMENT: Private banks are more efficient than state controlled banks but in these circumstances private banks are failing to operate. The world economy is like a patient whose vital organs are missing the blood. We need to re-establish the blood flow and after that to save the patient. Exceptional times require exceptional measures.

    February 20, 2009 at 10:30 pm |
  36. sharon kaiser

    A National Banking System could be putting all that interest money into the revenue and possibly lower our taxes, or be applied to our Dept. We need more socialism to counter the adverse affects the corrupt Republic system has brought us .
    Stop letting the oligarchy demonize socialism. This system could give us National Health Care and we could raise our poor health standards and poor Educational levels.
    Stop profit motivation for the greedy and start helping our overall population.

    February 20, 2009 at 10:29 pm |
  37. Tim Adams

    If we nationalize our banks, what will happen after the financial crisis is over? Will they go back to being private entities, or will they remain in government control?

    February 20, 2009 at 10:27 pm |
  38. cindy d

    no, less government please!!! the big spending bill was a big mistake all they had to do is let us keep our withholdings for a year and that would have stimulated the economy people would have more money immediately but congress wouldn't have all that money to play with they just wanted to get into our pocketbooks, they tell us to be responsible and they haven't ever been they vote themselves raises they have expense acccounts meanwhile the american peo;le are suffering i think this president is going to take our country down i

    February 20, 2009 at 10:24 pm |
  39. CJ from NYC

    Bank of American just increased the interest rate on my Visa card from 13.99% to 24.49%, We stopped charging on this card last Oct., auto pay our charge card on time every month and pay 2-3 times the min. pymnt We bail these banks out and then they hit us up with usury charges. You can't trust these guys as much as i don't think banks should be nationalized, but we can't trust what these banks will do. Take-over the SOB's and regulate this industry NOW and stop this insanity- before they bankrupt me and the rest of America.

    February 20, 2009 at 10:23 pm |
  40. Dave Autrey

    I was in the banking business for 30 years when homeowners were "required" to have 20% down and auto buyers required to have 25% down. It's only been within the last five years that it changed. It got "stupid"!! Now our nation is looking at nationalizing banks. That is insane! Once that happens we are on the road to a socialistic form of government. I have become very disillusioned with our politicians.
    We are in unchartered waters and we owe it to lazy politicians in DC that became comfortable with multiple growth of the GNP when in fact it was all a big fraud. Is anyone paying attention????

    February 20, 2009 at 10:22 pm |
  41. Ed Muzika, Ph.D.

    Greenspan knows these guys well. He knows they are not to be trusted to do what is right for the country or their shareholders. We need to nationalize the banking system.

    John Maynard Keynes said Wall Street was necessary to keep predators like traders off the streets where they could cause real trouble.

    The least dangerous route back to stability is to nationalize private sector banking.

    February 20, 2009 at 10:18 pm |
  42. Ron Burt

    Don"t nationalization some banks but nationalization all the banks

    February 20, 2009 at 10:17 pm |
  43. Diane

    Yes, I agree the banks should be nationalize, aleast for 5 years. I have no trust in our banks as of today. I'm tired as taxpayer, we as the people keep pumping money into fail banks is pointless. Esp. if they are sitting on the money and not using the money properly to the American people.

    February 20, 2009 at 10:16 pm |
  44. Kim Sanders

    Not all shareholders of banks are wealthy. Tens of thousands of people are employed by these so called "Zombie Banks" who have a large percentage of their 401Ks paid in stock. These are just average people who aren't making huge bonuses. They will be wiped out with nationalization. Where's their bale out?

    February 20, 2009 at 10:14 pm |
  45. Kurt

    Nationalize one bank. Fire everyone from the top ondown to the loan officer level.. all these people shared in the bad decisions that led to this subprime crisis. Then hire their replacements from the ranks of the unemployed and let those that were fired know.. what it is like to live in fear, with anxiety, of NO job, so that they will never ever do it again, should they work for another bank.

    February 20, 2009 at 10:13 pm |
  46. Larry L.

    When the Democrats said they were going to hit the ground running that was an understatement,in just over one month the new administration has turned our economy from a recession into the beginning of a depression,with a socialistic monetary system.

    February 20, 2009 at 10:00 pm |
  47. John from Jersey

    It seems Obama picked lightweights for economic advisors. Bozos like Geithner (and Dodd) are making McCaine-Palin look good. Geithner is like the Typhoid Mary of economics. Keep that pretentious yuppy away from live video feeds. Santilli's message resonated across party lines. Where's the leadership?

    February 20, 2009 at 9:53 pm |
  48. CaseyJ - Novato, CA

    Years from now, when consumers get back on their feet, banks (as we know them today) will have a lot more to fear. I see a backlash and mutiny against banks who have shown no scruples and a severe lack of ethical behavior, not to mention disrespect for consumers and our country. There will be a price to pay, as there should be.

    February 20, 2009 at 9:42 pm |
  49. Isabel, Brazil

    The nationalization is no guarantee of productive efficiency in the company's poor financial situation; it may no contain the crisis;
    it can no provide resources to State; and finally can no improve the service to the public when dealing with service companies.

    It's dangerous and can swell the public coffers.

    February 20, 2009 at 9:38 pm |
  50. Annie Kate

    I just saw a commercial (on CNN) that reminded me of the election – but it was about the stimulus package and was pointing out all the things about the stimulus package the GOP (usually) doesn't like – it ended with a "Just tell Congress No to big spending". Are we going to have this sort of junk from now until the next election? At any rate they are against it.

    On the banks I'd rather them not be nationalized but I am going to trust Obama and the economists in the little bow ties to figure it out. I just want to still have my money at the end of the day.

    February 20, 2009 at 9:22 pm |
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