What to make of all this talk of nationalization? It once seemed to be a far-fetched solution, but then Fannie and Freddie were forced into conservatorship. Now, the idea is being talked about as a real possibility for the likes of Citi and Bank of America. In fact, according to CNBC, some people think it's no longer a matter of if, but one of when. People--the likes of Alan Greenspan and Sen. Lindsey Graham--whom you would think would be big foes of the idea are voicing surprisingly soft opposition. (If that's what you want to call it.) 

To be sure, some maintain the fears are overblown. One investor is so sure, he's talking up his recent purchase of Wells Fargo. "I'm willing to put a stake into the ground at these prices and say that banks like Wells Fargo have gotten too cheap." We've heard such sentiment before. A lot of value investors have been really hurt by such thinking. Not so long ago, people were saying much the same thing about Fannie and Freddie, right before they were effectively taken over. 

The Obama Administration says it doesn't want to get into the business of running banks; it's trying hard to get the word out in the media. Bank of America's CEO Ken Lewis is equally adamant that nationalization is not necessary and that his bank is not in need of additional aid, but people are not convinced at the moment. To many, the government has no choice but to keep creeping toward stronger intervention. 

Nationalization of course can mean many things. In the strongest definition, it means an outright takeover by the government, akin to the Fannnie and Freddie situation. If that were to happen with Citi and Bank of America, it would almost certainly wipe out common shareholders. In the weakest version, nationalization means seizing enough control, via bailout injections, that the government is effectively calling the shots. By that measure, Citi for one has already been nationalized. 

Whatever you want to term it, it seems we're creeping toward more involvement. It remains to be seen just how far it will go, but it's increasingly becoming a semantic issue. - Jim