The threat that some U.S. banks might collapse under the weight of bad debt has made the once unthinkable distinctly possible. The government could very well nationalize two of the country’s biggest institutions, Bank of America and Citigroup. To the banks’ customers, nationalization wouldn’t bring huge changes. Some branches would likely close and customer service certainly wouldn’t get any better. But at the same time, nationalized banks would be expected to loosen restrictions on credit and put a halt to foreclosure procedures. The banks’ shareholders, on the other hand, would see their investments wiped out. Past experiments with bank nationalization has yielded mixed results: the U.S. takeover of savings-and-loans institutions is generally regarded as a success, but France is finding it might need a second try with some of its institutions.
The bank of the U.S. government
A primer on bank nationalization in the U.S.
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