Volcker: Full U.S. bank nationalization not likely

WASHINGTON (Reuters) - The government can step in when banks cannot raise private capital, but full-scale nationalization where entire firms fall into public hands is not likely, White House economic adviser Paul Volcker said on Thursday.

"I don't think that's at issue," Volcker told the congressional Joint Economic Committee when asked about the prospects for full bank nationalizations.

He said it was preferable for banks to raise capital from the private sector, but acknowledged that was "not feasible" in many cases, and the government would have to temporarily fill the gap.

He also said isolating banks' bad assets would be beneficial for restoring confidence, and while that involves solving tricky issues such as valuing the assets, it can be done.