Wharton's Take on Bank Nationalization

Updated from Feb. 23

After a generation of increasingly relaxed regulation of the financial services sector, the very concept seems stunning: Nationalization of banks in Europe and the United States.

But with many global banks still teetering on the brink of insolvency -- even after rescue efforts that have included multi-billion dollar infusions of capital and other forms of assistance -- a growing number of economists now argues that government takeovers of the most deeply troubled institutions, at least temporarily, may be the only remaining solution.

In the U.S., former Fed chairman Alan Greenspan has unexpectedly joined a list of notable financial experts who believe some banks may have to be nationalized temporarily. Additional surprising converts include prominent Republican politicians such as Sen. Lindsey Graham of South Carolina and former presidential candidate John McCain. ...