What are the pros and cons of nationalization of banks?

Answer 1

Pros: * You nationalize if a bank is too big to fail but in too much trouble to ever work its way back to solvency. * You nationalize because it allows rapid reorganization and writedown of debts, just as in a normal bankruptcy. * You nationalize because it's fair: it wipes out shareholders and provides taxpayers with an upside for their investment. * You nationalize because it makes the selloff of toxic assets easier since they can be hived off and held onto for a while without having to value them first. * The fundamental principle is that in a capitalist system, ownership and control of failed enterprises should reside in the hands of whoever buys up the corpse. If that's the government, then that means nationalization. Cons: * The common shareholders lose their entire investment in the stock. * Drive financial stocks to the ground and may affect other sectors. Nationalization is in favor of the taxpayers and not the shareholders. Obama promised his supporters that he will turn things around. IMO, he's all for Main Street than greedy Wall Street. I think nationalization might occur in the near future. Sell your BAC and C stock now while you can.