Politicos' Loose Lips Sink Stocks

DC and New York usually keep a healthy distance. These days, though, Wall Street has no choice but to hang on every word of key politicians. For the pols themselves, Politico reports, that takes some getting used to. When Sen. Chris Dodd publicly toyed Friday with the idea of bank nationalization he prompted a flood of selloffs.

“Sen. Dodd’s ‘nationalization’ comment wins the Oscar for most irresponsible remark by a US official,” says a Bush administration official. But, as is often the case with seemingly innocuous remarks that induce drastic market reactions, what Dodd said is true: The government is thinking about nationalizing. Bankers may know, theoretically, not to over-interpret guesses like Dodd’s, but they can’t stand alone if everyone’s selling.