Nationalizing Banks a Growing Debate

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CBNNews.com - The government will examine 20 of America's biggest banks this week to see just how strong their financial situation is.

The action comes amid a growing debate over nationalizing big banks like Citigroup and Bank of America.

The White House says it believes banks should be private.

"The President believes that privately held banking systems regulated by the government is what this country should have," Robert Gibbs White House Press Secretary said.

But some economists say at least temporary nationalization is inevitable.

"Eighteen months from now, we the people will own several of the biggest banks in America," Paul Krugman, Princeton University economist, said.

Investors Show Some Relief

The government has already taken a stake in some of the nation's largest banks. The Wall Street Journal reported late Sunday that the government could end up holding up to 40 percent of Citigroup's common stock.

Still, investors seemed skeptical of the report, as the Dow took a big drop, Monday, to its lowest level in more than a dozen years.

Last week, stocks also took a dive as investors worried the government would be forced to pump more money to Citigroup and Bank of America Corp.

On Sunday, the Journal's report indicated the expanded U.S. stake in Citigroup would leave existing shareholders with some stake, albeit one that is diluted.

That appeared to ease some investor concerns at least because it reduced some uncertainty about the company.

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