The White House said that the President is in favor of keeping the US banks private. That caused a mild rally in their shares yesterday after they had dropped like rocks though most of the session.
But, the comment from the Administration does not mean a thing, especially in the way it was expressed.
According to Reuters, the President’s spokesman said “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.”
Put another way, based on what the president and the Treasury Secretary know now, they favor the system as it is. But, what they know now could change in a matter of days if customers stop doing business with one of the large banks like Citigroup (C) or Bank of America (BAC) and shares in one or the other plunge into the pennies.
Senator Dodd’s comments that the banks might have to be nationalized may be undermining the government’s attempt to keep the banking system private. But, his comments may be right.
Douglas A. McIntyre
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