White House rejects rumours of bank nationalisation

The Obama administration said Friday it was not trying to take over Citigroup Inc. and Bank of America Corp., the two ailing financial institutions.
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Updated on Feb 22, 2009 12:37 AM IST
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None | ByXinhua, Washington

The Obama administration said Friday it was not trying to take over Citigroup Inc. and Bank of America Corp., the two ailing financial institutions.

"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," said White House Press Secretary Robert Gibbs.

"That's been our belief for quite some time, and we continue to have that," he said, rejecting rumours of impending nationalisation of troubled banks.

On Wall Street, Citigroup plunged 20 percent while Bank of America dropped 12 percent in afternoon trading as rumours of nationalisation prompted investors to sell.

A Treasury Department spokesman also rejected the fears and said: "There are a lot of rumors in the market, as always, but you should not regard these as any indication of the policy of this administration."

As Treasury Secretary Timothy Geithner has said, "we will preserve a financial system that is owned and managed by the private sector", he said.

The US government has already provided significant aid to Citigroup and Bank of America in its efforts to save the nation's financial sector, which has been choked by bad assets.

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