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January 30th, 2009 (Modified on March 6th, 2009)

Breaking Down Nationalization



The term “nationalization” has been mentioned quite a bit over the past couple weeks as a possible solution to the banking crisis. What is it exactly? How would it affect your account? The Wall Street Journal breaks down nationalization:

What does “bank nationalization” mean?

A nationalized bank is owned and run by the government. The shocks of the credit crisis last fall spurred lawmakers to seminationalize the banking sector; nearly 314 institutions have already signed over some of their shares and other securities to the Treasury in return for $350 billion in government TARP funds. The government could now go a step further by taking complete ownership of certain troubled banks.

What will happen to my account if my bank is nationalized?

There should be very little change to consumers’ bank accounts and insurance-protection levels if their bank is nationalized. The Federal Deposit Insurance Corp., which insures deposits for up to $250,000, will continue to cover all FDIC-insured institutions, regardless of who the owner is.

And even though an increasing number of banks are failing, the FDIC — which is backed by the full faith and credit of the U.S. government — can’t run out of money because of its ability to borrow from the Treasury.

Click here to read the rest of the WSJ article “What if Uncle Sam Takes Over Your Bank?”

(story courtesy of ConsumerWorld.org)

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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