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Chinese Banks ‘Great Shorts,’ Won’t Be Broken Up: Chanos
CNBC.com | April 12, 2012 | 07:42 AM EDT

"I would believe it when I see it to break up the banks," Chanos said. "In China, remember, the the banks are arms of state policy. They loan because the local party official or regional party official tells them we need a new stadium. They are instruments of state policy. I really doubt the party is going to give up a lever of power by breaking up the banks."

The Communist Party has been rocked lately by scandal, as the wife of local party chief Bo Xilai is a suspect in the murder of British businessman Neil Heywood .

For the Chinese political system, the case is a game-changer, in that Bo was considered a rising star in the party and possibly headed for its top position.

"Some people have dubbed the party 'The Family,'" said Chanos, comparing the communists to the American Mafia. "We're seeing more than a peek behind the curtain, we're seeing a real struggle."

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