Almost all major banks will be insolvent air

With an action fell to the lowest Friday ( 22,31 for Citigroup to 1.95 $, and 3.56 for Bank of America, to 3.79 dollar), the much speculation on the nationalization of the two largest U.S. commercial banks. There is concern that the repeated assertions of Government do not want to take this road.

The spokesman for the White House, Robert Gibbs, said Friday that "the administration remains convinced that a private banking system is the right way to do". But the financial stability plan unveiled there 10 days by the Secretary of the Treasury, Tim Geithner, provides that the State taken the capital into the banks if necessary, and it has the potential to transform preferential shares into ordinary shares. So far, public authorities have put 235 billion on the table to strengthen the capital of banks, in exchange for preferred shares to not dilute the shareholders.

The lack of details of the plan of Tim Geithner has also made very nervous markets, concerned particularly the fate of the toxic assets on the balance sheet banks while the rate of failure of the commercial real estate loans is increasing. "The Government will do everything before nationalization, but it is perhaps solve," said the Agency Bloomberg Lee Delaporte, Director of Dreman Value Management research. Level banks actions tells us that this will happen.

Beleaguered, Citi said Friday that "its capital is very strong" and that the Bank continues "to progress in reducing its assets, expenses, restructuring its activities for future profitable growth."

"Misunderstanding".

Ken Lewis, CEO of Bank of America, has him, defended its position in a statement its employees by the "Wall Street Journal". "The speculation on the nationalization is based on a misunderstanding of our financial position and a poor understanding of what this would be for our customers and the economy", he writes, ensuring that the Bank is well capitalized, profitable, with good levels of liquidity and continuing to lend actively. But the market capitalization of Bank of America is $ 19 billion, while has invested it, like Citi, $ 45 billion. The latter is even worse off with a market value of 10.6 billion.

Tests of strength on large commercial banks have to be launched in the coming weeks to assess their capital requirements and their capacity to lend. These tests could be used argument in favour or not of nationalization. Provided that markets do not send the banks before carpet.

Taboo until there are few, the "nationalization" is now a commonly used Word, notes Frank Rich, a columnist of the New York Times", not what would be to avoid to make another... "depression". The idea of bank nationalization was certified by Alan Greenspan, the former Chairman of the Fed, in an interview with the "Financial Times" last week, on condition that it is "temporary." Senator Chris Dodd, Chairman of the Senate Banking Committee, has himself been in this sense but his alter ego in the House

A period of six months

In an interview with the "WSJ" Saturday, Economist Nouriel Roubini, the New York University Stern School of Business, believes that the nationalization of several large banks will intervene within a period of 180 days. "In six months, banks were solvent air today will not." Almost all major banks will be insolvent air. In this case, if you nationalisez them all at the same time, you do less damage to nationalize two now by creating lots of confusion, panic and nervousness. "According to him, this may be a solution to the extent that discards the consolidation, which has further accentuated the systemic risk in the financial sector. The butchering of some Giants could then give birth to three or four large regional banks.