Markets fall after Gibbs won't rule out bank nationalization
Despite all the careful attempts of White House press secretary Robert Gibbs to parse his words regarding questions on any future bank nationalizations, markets sank to their lowest levels in 10 years Monday afternoon when he would not answer a direct question on the matter.
He did not answer a direct question from NBC White House correspondent Chuck Todd at a press conference on why he didn't just come out and say firmly that there would be no future bank nationalizations. Instead he referred the White House press corp to his Friday statement on the matter.
"Obviously, there are a lot of moving parts in the financial stability plan," said Gibbs referring to the plan first promoted by Treasury Secretary Tim Geithner. "It's the belief of the president and the economic team that the structure of a privately held-system, regulated by the government, is the best way to do things."
After his remarks, the major market indexes fell to their lowest levels in a decade, according to The Associated Press.
"The Standard & Poor's 500 index fell to April 1997 levels Monday, while the Dow Jones industrial average, down about 215 points, reached its levels of October 1997 as investors succumbed to their growing worries about a recession that has no end in sight," reported the AP.
Said Gibbs, "There are any number of challenges that we have in front of us on any number of economic issues. The president and his team work every day implementing the recovery."
MSNBC host John Harwood speculated that it was Gibbs' decision to not issue a definitive "no" to questions about future bank nationalizations that drove the investors to sell their stocks.
"He wouldn't go further when Chuck Todd and others were pressing him to say 'we absolutely will not nationalize banks,' and you notice what happened after that -- the market went down," Harwood said.
Harwood added that Gibbs may be declining to answer the question out of a desire to not get stuck in a long debate about linguistics.
"Part of that may be because we get into a semantic distinction," Harwood said. "If the government is going to convert those preferred shares in, say, Citigroup, and take up to 40 percent, what's the difference between that and nationalizing banks?"
This video is from CNN's Newsroom and MSNBC's News Live, broadcast Feb. 23, 2009.
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