'Fast Money' Recap: Nationalization Rumors Spook Markets

Nationalization fears rattled the bank stocks Friday as the markets continued to sink.

The Dow Jones Industrial Average fell 100.28, or 1.34%, to 7,365.67, while the S&P 500 lost 8.89, or 1.14%, to 770.05. The Nasdaq dipped 1.59, or 0.11%, to 1,441.23.

Dylan Ratigan, the moderator of CNBC's "Fast Money" TV show, said the banks were murdered by the widespread speculation of nationalization and other policy moves from the Obama administration.

Joe Terranova said the focus is finally on getting the banks to own up and recognize their losses. "We're focusing finally on that critical issue that has been with us for the past six months," he said.

Karen Finerman said nationalization fears have been hammering the equity of Bank of America (BAC Quote) to $2.65 a share.

Finerman, who owns the bank's preferred shares, said the administration's attempt to temper the talk about nationalization by saying it is still for a private-sector banking system bodes well for the preferred stock. And she said the preferred shares will go a lot higher if the bank goes through with plans to pay dividends in March.

Ratigan raised the question about the meaning of nationalization. He wondered whether it means government control and liquidation, or equity obliteration, or the obliteration of preferred shareholders and bondholders.

Terranova speculated whether it would be wise for the administration to give the banks the money they need without getting them to recognize their losses.

Finerman told Terranova that the situation isn't so clear cut. She said a forced liquidation of the assets isn't necessarily the right thing to do because the banks could still recoup some of their losses in the bad assets over time.