Feb. 19--WASHINGTON -- Federal Reserve Chairman Ben Bernanke said Wednesday that there would be drawbacks to the federal government nationalizing banks and that the Obama administration remains committed to a quick return to private hands if that becomes necessary.

"As a general rule, it's very challenging for governments to manage banks for a protracted period," Bernanke said to a luncheon crowd at the National Press Club. "There is the additional problem if you have a government-run institution, you tend to lose their franchise value, and counterparties don't like to deal with you because they don't know your future.

"Whatever action would need to be taken at one point or another, there's a very strong commitment on the part of the administration to keep banks private and return them to private hands as quickly as possible."

Bernanke was responding to a question about whether he agreed with his predecessor, Alan Greenspan, who told the Financial Times it may be necessary to "temporarily nationalize some banks in order to facilitate a swift and orderly restructuring."

There's rising talk elsewhere that nationalizing banks could be the best way to rid them of toxic assets corroding their balance sheets. Sen. Lindsey Graham, R-S.C., told the Observer this week that the government should weigh nationalization because it has already poured billions into banks with little to show for the economy.

A government takeover could wipe out existing shareholders, which is one reason for the pressure on bank stocks. Bank of America shares fell more than 6percent to $4.57 Wednesday after tumbling 12 percent Tuesday.

To be sure, the administration hasn't signaled any plans to nationalize banks. Treasury Secretary Timothy Geithner last week said: "Governments are terrible managers of bad assets." Exactly how a nationalization plan would work is also unclear.

Geithner, however, has announced plans to apply "stress tests" to banks, although he hasn't disclosed details. Bernanke called the tests a "diagnostic tool" to ensure their viability.

The review of major banks' assets and liabilities would assess "not only what is their true position but how would they do under a more stressful scenario in which the economy does worse even than we expect it to," he said.

"The purpose of that exercise is to try to determine how much more capital and other measures would be needed to ensure the banking system would be robust," Bernanke said.