Many in the economic and financial world have been bruiting about the possibility of "nationalization" of troubled banks, whatever shape that might take. (The Swedish example is often held up.) As the government dithers without a detailed rescue plan, bank stocks have continued to fall for fear of the consequences of nationalization, which Vincent R. Reinhart says are real: concerns about effective management, government interference, and fairness.

But "properly done, the resolution of a large complex financial institution need not be an exercise in unfairness," Reinhart writes. "As a general principle for policy intervention, the government should attempt to create as few capital gains or losses for existing investors as possible, based on a plausible estimate of the long-term odds of government intervention and reasonable liquidation values for the firm’s assets."