WASHINGTON (AP) - The White House on Friday insisted it's not trying to take over two ailing financial institutions, even as stocks tumbled again.
On Wall Street, talk of nationalization of Citigroup Inc., and Bank of America Corp., prompted investors to continue to balk, worried that the government would have to take control and wipe out shareholders in the process. Citigroup fell 20 percent, while Bank of America fell 12 percent in afternoon trading but also came off their lowest levels.
"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," White House press secretary Robert Gibbs said when asked about nationalizing the banks.
"That's been our belief for quite some time, and we continue to have that," Gibbs said.
Investors have shown decreasing confidence that U.S. banks can right themselves. Citigroup and Bank of America have already received significant help from taxpayers as the government has rushed in to try to save the financial sector, which has been choked by bad assets and seen the flow of credit shrink.
The speculation about the two banks' future continued to take a direct toll on the market.
Gibbs was pressed for more details on his answer - specifically whether Obama would not nationalize banks. He said it was hard for
him to be any clearer.
When a reporter suggested Gibbs could do that by saying point bank that Obama would never nationalize banks, Gibbs would not make that statement, but emphasized: "I think I was very clear about the system that this country has and will continue to have."