New York, NY (PRWEB) February 25, 2009
In today's issue of Profit Confidential, a widely-read market and investment newsletter, financial expert Michael Lombardi urged the Obama Administration to think carefully before nationalizing any major U.S. financial institution.
In his report released today, Lombardi wrote, "In my lifetime, I have never seen so many people - analysts, economists, governments, consumers and investors - so negative about the economy. The big story this morning is the nationalization of major American banks, namely Citigroup, Inc. (NYSE/C) and Bank of America Corporation (NYSE/BAC). Rumors have it that the only way for the big banks to survive is to nationalize them."
Lombardi is concerned that any such attempt might fundamentally unbalance the U.S. banking sector. "The nationalization of a bank the size of Citigroup or Bank of America, which we have never had in the U.S., presents a slew of new problems, most importantly competition. Banks need a level playing field, so they compete against each other for customers." Lombardi continues, explaining, "Should the government take over a major bank, the government would be inclined to get that bank lending to consumers and business, most likely at lower rates. This would not be fair competition to the other banks. What's next after that? Major corporations hiring lobby groups to lobby Washington for loans from a nationalized bank?"
In an article appearing in today's Profit Confidential e-letter, Lombardi outlines some of the other reasons that bank nationalization should be avoided. "The Federal Reserve and the U.S. Federal Government are in an all-out war -- this time against the economy. I believe the Fed will do everything in its power to prevent stock deflation. I see the government pumping more and more money into the economy." He continues, "We are already paying for the ongoing wars in Afghanistan and Iraq. The cost of the economic crisis bailout has been in the trillions. How much will nationalization of the banks cost?" In conclusion, Lombardi asks, "My real question is: just how much more debt can the U.S. government take on? At a certain point, are we not using good money to chase bad money?"
For the full report, please visit: http://www.profitconfidential.com
About Lombardi Financial and Profit Confidential:
Profit Confidential is Lombardi Financial's free daily investment and market e-letter. Written by financial gurus with over 100 years of combined investing experience, Profit Confidential analyzes and comments on the actions of the stock market, precious metals, interest rates, real estate, other investments and the economy. Lombardi Financial is a division of Lombardi Publishing Corporation, one of the world's largest newsletter companies, now with over one million customers in 141 countries.
For more information, visit: http://www.profitconfidential.com