Is Obama clearing the way for the nationalization of US banks?

Look carefully at the joint statement put out this week by Treasury, FDIC, OCC, OTS and the Federal Reserve.

"Any government capital will be in the form of mandatory convertible preferred shares, which would be converted into common equity shares only as needed over time to keep banks in a well-capitalized position and can be retired under improved financial conditions before the conversion becomes mandatory. Previous capital injections under the Troubled Asset Relief Program will also be eligible to be exchanged for the mandatory convertible preferred shares."

Translated in English, that means the banks repay the US Government with common stock, giving it a stake in the business. Now, of course that does not necessarily mean nationalization. As The Wall Street Journal points out, the US government has already taken a chunk of equity in banks including Bank of America, Citigroup and Wells Fargo. But it's non-voting, which means it's not actually nationalization.

So far, the Obama administration says it has not intention to nationalize. But as the Washington Post suggests, the US government's intentions seem cloaked in ambiguity. Whichever you look at it, the administration is opening the door to nationalizing US banks.