Bank of America and Citigroup shares plummeted for a sixth straight day on Friday, hammered by fears that the U.S. government could nationalize the banks, wiping out shareholders.
"It's a clear sign that the markets are expecting a high probability of them being nationalized," says Mike Holland, founder of Holland & Co. "The clear expectation is that shareholders would effectively be wiped out."
Support for a government move to take control of troubled banks seems to be growing. Republican Sen. Lindsey Graham, considered one of the more conservative members of the Senate, said nationalization could be an option, and former Federal Reserve Chairman Alan Greenspan said government intervention could be the least bad alternative left for policymakers.
"Right now, people are looking at the worst-case scenario, which is either a complete nationalization or Bank of America and Citi having to raise so much common equity that they dilute shareholders. It seems to me either one is a possibility," says Keith Davis, a research analyst at Farr, Miller & Washington.
"There's just so much uncertainty about what's going to happen to these two companies ... No one wants to get involved with these banks," he added.
As you can see from the charts, both stocks have lost more than 90 percent of their value in the last year. Each bank has received $45 billion in government aid in recent months and a backstop on losses on toxic assets. The aid exceeds the banks' current market value.
And that leads to our Fast Money reader poll. If the government nationalizes the worst banks do you think the market will finally turn and start heading higher?
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CNBC.com with wires