Are Citibank & Bank of America dead?

Dead but not yet buried? Financial Ninja says they are.

Citigroup (C) declined 61% from a peak of $4.10 to an intraday low of $1.61 over just 10 trading days. Bluntly put: Citigroup is dead.

Bank of America (BAC) declined 64% from a peak of $7.05 to an intraday low of $2.53 over just 10 trading days. Bluntly put: Bank of America is dead.

Dead actually means dead. It is unlikely they can survive the weekend... and if they do, they most definitely cannot survive the week.

He says that depositors are almost certainly already withdrawing their money, but bank runs today are done by mouse clicks, not like this:



FN says that the two banks' financial charts are their obituaries. Citibank chart, BofA chart.

Since his credentials for this sort of thing are immeasurably better than mine, I can't even try to rebut. The key, he says, is the very large investors, who have lost their shirts in only the last 10 days and are almost certainly bailing while they can. Take Saudi Prince al-Waleed bin Talal, who in November of last year - just three months - held a five percent stake in BofA, but five percent of the bank's worth then was more than the whole bank is worth now.

Bloggingstocks.com adds:

Several months ago, Paulson forced several financial firms to take TARP money, even though it it possible that all of them did not need it. He wanted to send the message that the financial system was being recapitalized. In BAC's case, the stock market is indicating that it cannot survive without a lifeline, and the new Administration may want to act on that before the weight of the company's liabilities completely destroys confidence in the institution.

BAC's management, however, continues to insist the bank does not need rescuing.

Update: Well, it turns out that Sen. Chris Dodd had a lot to do personally with the crash of bank stocks in the last few days.