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Nationalization Rumors Batter Bank Stocks


From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.

Could have been worse. That's about all we got today from the stock market. A crummy ending to an awful week. The Dow Industrials ended up losing about 100 points, roughly 1.3 percent today. At one point the index was down more than 200 points. And at that point the Dow was at its lowest point in 11 years.

NPR's Yuki Noguchi joins me now.

Yuki, that was a big sell-off today before the market then bounced back. What is going on?

YUKI NOGUCHI: What happened were some rumors started by some very influential people in Washington, who started talking very seriously about nationalizing banks, at least temporarily. And Senate Banking Chairman Committee - chairman of the committee Christopher Dodd told Bloomberg today that it might be - might be necessary. And then markets just tumbled. Speculation about nationalization was so intense that White House spokesman Robert Gibbs had to respond.

ROBERT GIBBS: This administration continues to strongly believe that a privately held banking system is the correct way to go.

NOGUCHI: So you had a senator talking about nationalization and then the White House saying no, and the White House statement as well as assurances from Treasury that there would be more details on this bank rescue plan, you know, sort of assured the market by the end of the day. Tim Ghriskey of Solaris Asset Management said Washington's lack of clarity has really hurt the market.

TIM GHRISKEY: That's the issue, that there just aren't clear answers to really almost any of these problems.

NORRIS: Well, there was a lot of volatility in the market today. And some of the prices for these bank stocks, banks that were, you know, still standing just a few months ago, are pretty eye-popping.

NOGUCHI: Yeah. Well, investors have been trying to peg what they're actually worse, and that's really tough. I mean Bank of America is trading at $4 a share, and Citigroup, one of the largest banks, you can have their shares for $2 apiece.

NORRIS: Also, this week we saw some very troubling economic numbers.

NOGUCHI: Yeah, indeed. The economic numbers were a bummer. In particular job numbers showed that the number of people collecting unemployment shot up to record levels. Nearly five million people in the U.S. are getting unemployment benefits. And of course no one's building houses. Housing starts were down 70 percent, which is also a record.

You know, some of that's not bad. The fact that housing starts are low in the short run means, you know, construction jobs will suffer. But there is something like a year's worth of excess housing supply on the market right now. So you really don't need new homes. Today's inflation numbers are also a little mixed, you could say.

Prices for household goods basically didn't go up at all last year. In a way that's great for consumers. But it also points to the fact that global demand is so low that prices are staying put.

NORRIS: Now, the market is pushing big company stocks, not just the banks, to some historic levels.

NOGUCHI: Yup, that's true. And here is what Ghriskey of Solaris Asset Management had to say about that.

GHRISKEY: Really, the whole market was taken down. And you know, that just means broad-based selling and panic, fear, by investors wanting to get out really almost at any price.

NOGUCHI: You know, you saw General Motors stock hit its lowest level in more than 70 years. One of their brands, Saab, filed for bankruptcy today in Sweden. And in general the future of GM is way up in the air. General Electric, which owns NBC as well as some financial businesses, closed down below $10 a share.

NORRIS: Now, there's - clearly there's a sell-off going on on Wall Street. But for those investors who are buying, what are they buying?

NOGUCHI: Well, they're going safe. They're buying things like U.S. treasuries, which, you know, are so popular these days; the yield is down. And they're buying gold. Gold is trading at just above a thousand dollars an ounce.

NORRIS: And we haven't seen it that high in quite a long time.

NOGUCHI: That's right.

NORRIS: That's NPR's Yuki Noguchi. Thanks very much.

NOGUCHI: Thank you. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Yuki Noguchi is a correspondent on the Science Desk based out of NPR's headquarters in Washington, D.C. She started covering consumer health in the midst of the pandemic, reporting on everything from vaccination and racial inequities in access to health, to cancer care, obesity and mental health.
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