Zoopolitik

Advice to Obama: Bite the Bullet

by Harry Haller at 05:44 PM | Bay at the Moon | Ping Me!

Apparently Wall Street isn’t buying into the Barack Obama, Timothy Geithner hybrid approach to bank rescue. Here is Reuters’ lead:

Bank of America Corp and Citigroup Inc shares plummeted for the sixth straight day on Friday, hammered by fears the U.S. government could nationalize the banks, wiping out shareholders.

The shares came off their lows after the White House said President Barack Obama favored a privately held banking system, but investor concerns persisted.

The New York Times says reassurances from the White House rallied the markets late in the day:

Wall Street’s fears about a government takeover of major banks eased somewhat on Friday afternoon after the White House reaffirmed its belief in a privately owned banking system.

The Dow climbed back from a 200-point loss but still ended 100 points lower after the Obama administration tried to reassure nervous investors that it wanted to avoid nationalizing troubled banks.

‘This administration continues to strongly believe that a privately held banking system is the correct way to go, ensuring that they are regulated sufficiently by this government,”” a spokesman for President Obama, Robert Gibbs, said. “That’s been our belief for quite some time, and we continue to have that.”

The Washington Post calls the market’s response “erratic.”

Lurching ups and downs are great for roller coaster enthusiasts, but lousy for investors and the public. The Obama administration should take a stand one way or another and let the resulting storm play out. Uncertainty worries people more than bold action. Personally, I believe it is past time to temporarily nationalize banks, sell off the pieces, and move ahead. Sometimes those who play the market lose their backsides; it’s part of the risk they take to win big.

But regardless of the course of action, the time has come to say “yes, we will” or “no, we won’t” and get on with it. At least then we’ll all know where we stand.

As I used to tell customers when I worked in sales, “Sooner or later you have to decide. You’re either in or out. Stop wasting our time and choose.”

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