Investors are starting to figure out that “too big to fail” might just end up meaning “all your deposits and assets belong to the government,” if Friday morning’s trading activity in equity markets is any indication. Front and center in the most recent dust-up on Wall Street is none other than The Bank of Amerillwide — at least, that’s the moniker DealBreaker’s Bess Levin has taken to using for Bank of America (BAC), and we sort of like it over here at HousingWire. The Wall Street Journal reported Friday morning that BofA CEO Ken Lewis was issued a subpoena by New York State Attorney General Andrew Cuomo, over issues surrounding the bank’s acquisition of Merrill Lynch. Cuomo is attempting to discern if investors were misled at the end of 2008 regarding the depth of bad assets on the books at Merrill, and whether details of the bonus payments should have been disclosed to investors. Market chatter and rumors HW has heard have suggested for weeks that BofA’s own board was surprised by how many bad assets appeared on Merrill’s books after the rushed acquisition (and the assumedly pressed due diligence process that went with it); if there is any truth to the rumors, it may be difficult to suggest that BofA deliberately misled investors. Nonetheless, both BofA and fellow banking giant Citigroup, Inc. (C) saw their stock prices tank early Friday as investors fretted over the potential nationalization of both entities. “We see no reason to nationalize a bank that is profitable, well capitalized and actively lending,” Scott Silvestri, a spokesman at Bank of America, told MarketWatch. A Citi spokeman echoed similar logic to the news service. The Journal also reported that Lewis was put on the defensive Thursday during a senior leadership meeting, citing an unnamed source, and told company officials that policymakers in Washington have assured the BofA CEO that nationalization is not an option currently being considered. Shares in Bank of America were at $3.23, down 17.81 percent, when this story was published. Shares in Citigroup were off 20.32 percent, at $2.00. Analysts have speculated for week on the possibility of nationalization for some or all of the U.S. banking system. “I think nationalization makes an awful lot of sense,” Walker Todd, a former Federal Reserve official now with American Institute for Economic Research, told CNBC in an interview Friday. “Not only is it a viable alternative to keep going with TARP or bad bank solutions, eventually you reach the point where the money needed surpasses the capacity of the taxpayer.” And while policymakers have told BofA’s Lewis that nationalization is not on the table, other press statements from policymakers seem to contradict that sort of sentiment “The tolerance for throwing good money after bad has ended,” Kevin Bishop, a spokesman for senator Lindsey Graham (R-SC) told CNBC. “We’re talking about certain banks … temporary surgical stabilization.” Banks, perhaps that are large enough to be critical to the nation’s financial system. Banks like Bank of America and Citigroup, if investors voting with sell orders on Friday have any prescient insight to impart. Write to Paul Jackson at paul.jackson@housingwire.com. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.