The US accomplished much of the same in resolving the savings and loan crisis of the late 1980s and early 1990s.
Previous to that, the federal government took control of Continental Illinois (1984), then one of the nation’s largest bank, and Penn Central (1976), a major railroad company, and ran them for a considerable amount of time before selling them back to the private sector.
More recently, the FDIC took over the failed thrift IndyMac in July and is now waiting to close on a sale to private investors. In the fall of 2008. Washington wound up with a near 80-percent stake in AIG in exchange for massive federal assistance.
Some say AIG is worse off because of the government's involvement and are adamantly opposed to nationalization.
"I don’t believe it is the answer to today’s problems because I believe if we attempted to do it with one or more major banks today we would essentially destroy the franchise. These are much larger and complex institutions" says William Isaac, who was chairman of the FDIC from 1978-1985, and now is chairman of chairman of the Secura Group.
"I think the talk of nationalization is very, very harmful," adds Isaac. "Look what it's doing to [bank] stock prices. I think the government needs to make it clear that is not on the table."
The White House Friday afternoon did that--kind of.
"Let me reassure as best I can on banks," White House spokesman Robert Gibbs said during the daily press briefing. "This administration continues to strongly believe that a privately held banking system is the correct way to go...."
Fed boss Ben Bernake tried to do that during a major speech earlier in the week, but a slip of the tongue only added to the uncertainty, some say (Watch the video).
With bank shares dargging the market lower again Friday, Bank of America weighed in, saying the speculation was harmful to both the company and the economy.
“We see no reason why a company that is profitable with strong levels of capital and liquidity and that continues to lend actively should be considered for nationalization,” Bank of America said as part of a brief statement.
The Obama administration's recent announcement that it would start using a "stress test" for banks with assets over $100 billion as part of the financial aid process is seen as a prelude to some nationalization process. Such thinking has dragged on financial stocks in recent days, but that is not thought to be the Treasury Department’s purpose.