Bank of America Corp. (BAC) is getting help from the White House in trying to assure investors and depositors that the Charlotte bank won't soon be nationalized.

As shares in Bank of America and its New York rival Citigroup Inc. (C) slid sharply to new recent lows, Bank of American Chief Executive Ken Lewis, along with a key analyst and an industry group, came to the bank's defense, saying fears of a pending nationalization are misguided.

Friday afternoon, the White House issued its own message.

"This administration continues to strongly believe that a privately held banking system is the correct way to go, ensuring that they are regulated sufficiently by this government," White House spokesman Robert Gibbs said Friday. "That's been our belief for quite some time, and we continue to have that." The general consensus among even liberal observers is that the Obama administration prefers banks to remain out of the government's hands.

Bank of America's shares recently traded down 8% to $3.61, a sharp rebound after they fell 30% and touched $2.72 earlier Friday, a low not seen in decades. The stock is still off more than 90% from a year ago, lingering around distressed levels. Shares in Citigroup were recently down 22% to $1.95.

"Our company continues to be profitable," CEO Lewis told Dow Jones Newswires through a spokesman. "We see no reason why a company that is profitable with strong levels of capital and liquidity and that continues to lend actively should be considered for nationalization.

"Speculation about nationalization," he said, "is based on a lack of understanding of our bank's financial position as well as a lack of appreciation for the adverse ramifications [of such a move] for our customers and the economy."

Lewis continues to point out that his bank turned a profit in 2008, even as other banks reported losses of billions of dollars. The chief executive, as well as many analysts, also continues to say Bank of America will turn out impressive profits once the economy recovers.

But no matter what Lewis says or does, the very idea of a government takeover - once almost totally unthinkable - remains alive and well.

For weeks, the Charlotte-based bank's distressed shares have plummeted amid fears, rumors and, more lately, open suggestions from otherwise conservative figures that the government will one day take control of the company. Just Thursday, Lewis again responded to the chatter when he told senior managers at the bank that nationalization isn't an impending reality and that he had urged the government to say so publicly, according to a report in The Wall Street Journal.

A spokesman for Bank of America said Friday: "We see no reason to nationalize a bank that is profitable, well capitalized and actively lending."

Even as the bank has regularly repeated its message that it remains viable, and even profitable, pundits and also lawmakers have continued to raise the debate over nationalization, pushing the bank's shares down further. On Wednesday, former Federal Reserve Chairman Alan Greenspan baffled some long-time investors when he told the Financial Times that "it may be necessary to temporarily nationalize some banks in order to facilitate a swift and orderly restructuring."

That same day, U.S. Senator Lindsey Graham, R-S.C., told Reuters that if a bank fails a so-called stress test from the U.S. Treasury Department, then nationalization is one of the following options for regulators.

On Thursday, New York Attorney General Andrew Cuomo added to the bank's bad publicity when he issued a subpoena to Lewis. Cuomo likely wants to learn more about Lewis' knowledge of spiking losses last year at then-independent Merrill Lynch & Co., as well as the bonuses that Merrill paid to employees prior to its sale to Bank of America.

The chatter of nationalization, combined with darkening economic indicators, have cast a downward spiral on the bank's shares, where investors have begun to assume the worst.

"The bottom line is that people don't trust the banks," said Dr. Brett Steenbarger, a behavioral-sciences expert who counsels professional traders and money managers. The perception among investors is that "these are insolvent institutions," he said.

Joseph Battipaglia, head equity strategist for the private-client group at Stifel Financial Corp.'s (SF) Stifel, Nicolaus unit, offers an example of how banking executives may continue to confront investors' skepticism.

"Until the very last days before they nationalize these things, they won't say it," Battipaglia said of the bank executives. "Without support of the Fed and the Treasury, here and now, they would be insolvent."

Legislators in Washington last week asked both Lewis and Citigroup CEO Vikram Pandit whether their banks were insolvent. Lewis seemed incredulous and said he was "amazed" to be asked such a question, given that his bank was profitable in 2008. Pandit cited his company's high capital ratios, one measure of a bank's financial health.

On Friday, the American Bankers Association stepped in to defend the large banks against the rising nationalization chatter.

"We would very much like to put an end to the conversation," said Diane Casey-Landry, chief operating officer of the ABA.

"One of the challenges is defining exactly what people mean by nationalization," Casey-Landry said. "I'm not so sure everybody's talking about the same thing."

"However they're talking about it," she added, "we don't like it."

Casey-Landry and other opponents stress that, should the government nationalize any private company, the government immediately puts more taxpayer dollars at risk. And investors have long warned that there is scant precedent for the U.S. government taking over and then operating ongoing businesses, and the very specter of that happening could spook investors further.

Even so, the debate over nationalization has grown unmistakably louder as investors and policymakers alike have begun to consider the once-unthinkable.

"Not so long ago," said one industry publicist, "nobody seemed to want to even mention the word."

-By Marshall Eckblad, Dow Jones Newswires; 201-938-4306; marshall.eckblad@dowjones.com