Nationalization of the Banks

By Derek

One more step off the cliff.

I had a fascinating talk with a government official who will, sadly, have to go unnamed and undescribed.

I wanted to know if the rumors are true and many in government see nationalization of the banks as an inevitability; that several large banks are, basically, insolvent. If the government shuts them down, there is no other bank big enough to buy them all. So, the government has no choice but to own them.

This is, of course, a huge topic in the news. It's a massive transformation of the U.S. government's role in private markets. In short, it's the kind of thing that someone like me--a business reporter--would like to hear a loud, healthy debate about.

Not gonna happen.

The government official told me that if word leaked out in any way that the government was even considering nationalization, it could spook the stock markets so badly that all those troubled banks would, instantly, become dead banks.