The papers on bankers' worries about nationalization.

A summary of what's in the major U.S. newspapers.
Feb. 21 2009 4:42 AM

Bankers' Nationalization Worries Drive Market Plunge

The Wall Street Journal leads with, and the New York Times and Washington Post front, bankers' worries about nationalization. The Obama administration suggested yesterday that it would not try to nationalize banks, but the markets, led by Citigroup and Bank of America, plunged anyway. The New York Times leads with President Obama's expansion of stealth missile attacks on militants inside Pakistan. Two strikes this week came as a sign that Obama is continuing the Bush administration's policy of using American spy agencies against terrorist suspects in Pakistan. The Washington Post leads with, and the WSJ newsbox mentions, Obama's stern warnings to mayors: He'll call them out if they misuse their bailout money. The president's "salvo" was the first step in a campaign to assure the nation that the $787 billion will not go to waste. The Los Angeles Times leads with the deepening rift between California Republicans and Arnold Schwarzenegger after the governor reversed himself and signed $12.5 billion in tax hikes into law on Friday.

The WSJ highlights the Obama administration's attempts to allay fears of bank nationalization: On Friday, press secretary Robert Gibbs said that the president "continues to strongly believe that a privately held banking system is the correct way to go." That assurance didn't stop the Dow from closing with its lowest drop in four months, which the NYT sees as a loss of investor confidence. (Shares of the largest banking companies saw particularly deep plunges yesterday; the WP's front-page story dubs the occurrence a "fire sale.") The administration's lack of a detailed plan is "sowing confusion" in the markets about the banks' futures, the Times explains, and leading Wall Street to worry that Washington is "running out of time and options." A WSJ op-ed profiles Nouriel Roubini, a New York University professor who says that nationalization and resale is a "market-friendly" solution that should appeal to fiscal conservatives.

Advertisement

It is unclear why the Obama administration decided to carry out two attacks on Pakistani militants this past week, including one last Saturday and another on Monday, the NYT reports. Both strikes targeted camps run by Baitullah Mehsud, the man who orchestrated Benazir Bhutto's assassination last year and whose name appears on a classified list of militants the CIA is currently authorized to capture or kill. The strikes, which did not kill Mehsud, may have been prompted by U.S. concern that his attacks are weakening Pakistan's civilian government.

President Obama had "sharp language" for a group of 80 mayors who met in Washington on Friday; the WP calls it "an effort to respond to Republican critics who contend that there are too few controls" on the largest federal spending project in U.S. history. The president informed the mayors that his team will track how the money is spent based on guidelines in a report from his budget director. New Orleans Mayor Ray Nagin seemed the most eager to get hands on the money, saying he told Republican Louisiana Gov. Bobby Jindal that his city would be happy to take every dollar the state doesn't want.

Signing California's budget rescue plan yesterday, which includes sweeping spending cuts and tax hikes, Gov. Arnold Schwarzenegger "broke one of the few bonds left between his shrunken party and California's mainstream voters," the LAT reports. It also "enraged" the fiscal conservatives in the state's Republican Party. Even if California had laid off its entire state work force, it would have fallen "billions shy" of balancing the budget. That reality didn't keep the two top GOP gubernatorial contenders from lashing out at the governor's tax increases: One said it would "kill jobs [and] hurt families"; another called it a "fiasco."

Saturday style reports wrap up New York's fall fashion week, focusing on the conflicted mood that beset the couture crowd as it exhibited its expensive wares in troubled times. The NYT feels a "palpable grimness" in the tents at Bryant Park this season, and the WP notices that"no small number of well-dressed folks who six months ago indulged in existential angst over a pair of shoes, now respond with a simple word: employed." The Times story follows a Wall Street fund manager around the Nanette Lepore show, noticing that he couldn't stop checking his Blackberry and "groaning" at the sea of red stock symbols flooding in.

The NYT reports the cessation of hostilities at New York University, where students protested for 40 hours in a barricaded dining room and in Washington Square Park over "financial and academic issues." Eighteen students were suspended for "violating university rules"; their fates now await a disciplinary review.

The WSJ reports a peculiar trend from Japan: President Obama's speeches "have become the latest fad fueling this nation's long, and oft-frustrated, passion for mastering English." One English teacher in Tokyo draws 200 students a week to "Obama workshops" in which students "recite Mr. Obama's speeches line by line, using a special check sheet to record progress."

David Sessions is a former Slate intern. He is currently a blogger at Politics Daily.