Nationalizing banks - oh, the horror!

There must be something I'm missing. The US is in the midst of a very bad storm. There are huge issues to deal with. Whether or not to nationalize Citi and/or Bank of America isn't one of them. They already have one foot in the grave. Dumping the rest of the body won't take much work.

The term "nationalization" sounds like "communism." It's not. It's simply saying this big bank owes more in debts than it has in assets. It is bankrupt but we can't have a bank like Citi (once the world's largest bank) simply shut its doors... so the US government is going to step in and keep the doors open. They'll take over the toxic debt and break the bank up into sellable pieces. The big losers are current stockholders who see their equity wiped out. Shares are trading around $2 so they've already lost most of their investment. (Taxpayers could also be the losers if the debts are really, really toxic but... well, it beats the alternative.)

It won't be pretty, but it's a fixable problem... unlike some of the other challenges we face.