But I am skeptical of this proposition because the creditors are not some amorphous oligarchs. Creditors come in the form of bond holders or owners of other fixed income instruments. They are pension funds or the fixed income portion of 401(k)s. If they take the hit instead of the taxpayer it will be retirees who are taking the hit. After having just seen their stocks wiped out they will see their other revenue streams (annuities, bonds, etc.) reduced drastically. You throw in people that are within a decade of retiring and you have a very powerful special interest. These are people that vote and vote in large numbers. Maybe they will be content to just live on their social security check, and take the hit. But I am skeptical of this. If you nationalize, I think there will be a massive movement to use social security as a vehicle to mitigate retirees and near retirees' losses.
This is not an argument in favor of or against nationalization. I think the taxpayer is going to be on the hook for a substantial sum of money irrespective of the method employed to fix the banking sector. I think it's important to keep this in mind when we discuss fixing the banking sector. There isn't a silver bullet that will protect the taxpayer. For the purposes of planning a banking sector fix we need to assume that liability has already been booked and move on to other considerations.