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Europe reacts to Citigroup bailout
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Steve Chiotakis: Here goes the Fed, turning into salvation spring yet again. We’ve been hearing a lot about Citigroup’s future as the behemoth bank tries to weather the fallout from the financial crisis. The bank’s been battered by bad loans connected to the sour home and commercial real estate mortgage industry. It’ll take on — the Fed will — hundreds of billions of dollars of troubled asset losses in exchange for a chance to buy shares in the company. Citigroup’s stock is in the dumps, down almost 90 percent in a year.
Citigroup has a presence in more than 100 countries around the world. And in Europe, reaction is mixed. Markets are up, but there’s a sense that governments now have an excuse to meddle in free market territory. From Berlin, here’s Kyle James.
Kyle James: Banks led the stock surge this morning as investors in Europe seem to be breathing a sigh of relief. Another Lehman Brothers-style collapse was averted, at least for now.
But the U.S. government bailout of Citigroup has raised another concern. Investment strategist Roger Kunz worries it might encourage European leaders to ramp up government intervention across the board:
Roger Kunz: In Europe, we have many politicians who have basically been waiting for the opportunity to nationalize banks, important industries, et cetera. And I think this is not the way out of this crisis, at least not for the medium term.
One of loudest supporters of government intervention is France’s Nicolas Sarkozy. He’s meeting today with German chancellor Angela Merkel to get her support for a Europe-wide stimulus plan.
In Berlin, I’m Kyle James for Marketplace.
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