I understand that their shares have plummeted (and that many have lost savings). However I think there are two considerations. One, if the banks are nationalized the value to their shareholders is reduced to zero (but if a bank is forced to be taken over by another institution at least the shareholders own stock in the new institution). Second, as long as the shareholders own stock then their share value will increase….. Maybe not much and it may take a few years, but it's not a total wipeout.

If the government nationalizes banks and wipes out shareholder value then the government is essentially stealing money from the shareholders, who have lost so much already.

But obviously if, as elrod indicates, the bank is in receivership and the shareholders still own the institution, then it's not a total loss for the shareholders.

I think the government has already subsidized the shareholders…. C has received $45 billion in TARP and their stock is less than half that. The government is actually propping up the shareholders at these institutions. Plus the government guarantees, while not a direct prop of shareholder value, certainly supports shareholder value becvause it reduces the losses the banks (and their shareholders) have to endure.

What's interesting is that normally issuance of more shares cause a dilutive effect on the value of the stock. But these are not normal times and of the trillion or two in assets that C has, no one knows how much the value of those assets will decline….

Under “normal” circumstances, if it was one bank that was failing due to poor management decisions (like those made at C), I would say, “let it fail.” But we've seen that a failure (or a rumor of trouble) can have ripple effects…. and the current economic conditions are something most of us have never experienced before. I think we need to preserve (and create) jobs and shareholder equity even though it otherwise go against our “ideals” in a “perfect” world. We need to limit the damage to individuals as much as possible. If people have their savings wiped out or are forced to government assistance, then it will only become much more expensive for the government. Can you imagine the government spending on millions of people on unemployment if we reach depression era levels?

Besides, how would well would these people do if the government didn't intervene at all?

I'm talking about receivership, mainly. The top management is replaced but the core operations of the bank continue as before.

Shares in these institutions are held by individuals, institutions and probably more importantly employees and former employees (who have a good chunk of their retirement staked on the share prices) of those institutions. Nationalization of the largest banks, each of which probably employees a couple hundred thousand employees would put a strain on the economy for years to come.

Shareholders are the owners of the bank, they get to hire, supervise and fire the management. It's not my fault they didn't do their jobs.

Nationalizing the banks would just deepen and prolong the economic crises.

Also I don't believe our problem is with “six major banks”. More than six banks have accepted TARP money and some analysts put the estimate of bank failures at between 1,000 and 1,400 in the next couple of years…..