The clamor for nationalizing big banks grows each day. Those favoring nationalization recommend removing all bad assets from bank balance sheets, thereby wiping out, as needed, the equity of common shareholders, followed by the interests of preferred stockholders and then the bond owners.

The bad assets would then become assets of the Federal Deposit Insurance Corp. or a special entity established by the federal government. The new owners could then keep the assets or sell them to private investors, who are reportedly waiting anxiously to acquire them.

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