Experts: Most customers wouldn't notice nationalization

"Nationalization" is a scary word.

It conjures up images of Big Brother-like government control, particularly when the word is used in connection with the nation's banks, as it has been this week.

Banking giants like Citigroup and Bank of America continue to post losses in a down economy, despite having received billions of tax dollars in assistance as part of federal bailout plan. That has prompted speculation that the government could decide to take over the operations of one or more banks.

Do average, everyday customers have legitimate reasons to fear such a takeover? We asked a group of local economic experts to offer their insights.

• Let's say the government takes over my bank. What changes would I see in my regular banking activities?

William Obenshain, a former banker who now leads DePaul University's Center for Financial Services: "It probably wouldn't even register. You'd still use your ATM card, your credit card and your checkbook just like you always have. Remember, the intent of this would be to keep things running smoothly."

Getachew Begashaw, associate professor of economics at Harper College in Palatine: "In all likelihood, the government would try to run the bank as if it were still in the private sector so that it could quickly return to solvency. That means average savers like you and me wouldn't see any changes."

• Would my deposits be safe?

June Lapidus, chair of the economics department at Roosevelt University: "Yes, unless you have more than $250,000 deposited at the bank, which is the maximum that FDIC will insure. If you don't, then you'd be fine."

• What if I'm a shareholder in the bank?

Obenshain: "Investments are a different matter. In the case of the complete nationalization of a bank, investments in the bank would be at risk. The value of common stock would likely be diminished or eliminated. There's a chance for a total loss there."

• Does "nationalization" mean the government would control the bank forever?

Lapidus: "The term 'nationalizing' is causing unneeded angst. What the government is talking about is more a restructuring for failing banks, similar to what's happening in the auto industry. It's not intended to be a long-term situation."