Question by michel6119: What happen when government "nationalizing" a sector say like banks what happen to investor?
If the government "nationalizing"the banks will i as investor lose my money
Best answer:
Answer by vindevine
Well, to me there are several questions that need to be addressed before nationalization can seriously be considered.
They include what happens to the government guarantees of bank debt and whether both stockholders and preferred shareholders will be wiped out in a nationalization scenario.
"Unless and until those questions are answered, we cannot know to what extent taxpayers are at risk.
The fear and uncertainty about what comes next for the banks has sent shares of Citigroup and Bank of America down to 52-week lows. Shares of Citigroup recently recovered were down 20% at .01, while Bank of America shares have fallen 10% to .52.
Proponents of nationalization say the government would take control of the largest banks on a short-term basis in order to loosen lending and act as an implied guarantee to soothe customer concerns. But opponents note that nationalized banks might have an unfair advantage over banks that aren't under government control.
A possible scenario in which nationalization may make sense is if large institutional depositors cause a run on the banks by withdrawing their deposits.A depositor run is what ultimately pushed Wachovia into the arms of Wells Fargo & Co. (WFC), despite Wachovia having strong tier-one capital ratios at the time.
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