JPMorgan Chase is down 7 percent, Bank of America 14 percent and Citigroup 20 percent. Fear of nationalization are running wild on Wall Street. If these rumors are offbase, the White House needs to clearly say so. Now. But the one clear message that came out of Treasury Secretary Geithner's big speech, as investors see it, was that the "stress test" could lead to a full government takeover. And don't forget about the insureres. David Goldman hasn't:
But the more interesting story remains the big insurers. Citigroup is trading ugly at +450 basis points, but Swiss Life (BBB-) is at +863 (mid market), Lincoln Nation is at +818, Prudential Financial is at _742, Hartford Financial is at +666 (didn’t make that one up), and so forth. If the banks go down, the insurers who own their Tier 1 and subordinate debt and preferred shares get whacked as well.
Me: Goldman also notes that the odds of default by smaller nations such as Greece, Austria and Belgium are rising.