The discussions are taking place in the backdrop of rapid deterioration in the country's biggest banks, notably Bank of America and Citigroup which, Obama officials believe, would require far larger investments atop the more than USD 300 million of taxpayers money already poured into the two institutions.

The Obama administration, the 'New York Times' said, is making only glancing references to those questions. In an interview on Sunday in 'This Week' on ABC, House speaker Nancy Pelosi referred to internal debate when she was asked if nationalisation, or partial nationalisation of the largest banks was a good idea.

"Well, whatever you want to call it," said Pelosi, a Democrat. "If we are strengthening them, then the American people should get some of the upside of that strengthening. Some people call that nationalization."

"I'm not talking about total ownership," she quickly cautioned - stopping herself by posing a question: "Would we have ever thought we would see the day when we'd be using that terminology? 'Nationalization of the banks?"

The 'Times' says, so far President's top aides have steered clear of the word entirely, and they are still actively discussing other alternatives, including creating a "bad bank" that would nationalise the worst non-performing loans by taking them off the hands of financial institutions without actually taking ownership of them.

Others talk of de facto nationalisation, in which the government owns a sizeable chunk of the banks but not a majority, with all that connotes, the paper added. That, the 'Times' says, has already happened; taxpayers are now the biggest shareholders in Bank of America, with about 6 per cent of the stock, and in Citigroup, with 7.8 per cent.

But the government's influence is far larger than those numbers suggest, because it has guaranteed to absorb the losses of some of the two banks' most toxic assets, a figure that could run into the hundreds of billions of dollars, the 'Times' said.

The paper says, many believe this form of hybrid ownership - part government, part private, with the responsibilities of ownership unclear - will not prove workable.

"The case for full nationalization is far stronger now than it was a few months ago," Adam S Posen, the Deputy Director of the Peterson Institute for International Economics, was quoted as saying.

"If you don't own the majority, you don't get to fire the management, to wipe out the shareholders, to declare that you are just going to take the losses and start over. It's the mistake the Japanese made in the '90s."

"I would guess that sometime in the next few weeks, President Obama," he said, "will have to come out and say, 'It's much worse than we thought,' and just bite the bullet."

So far, the paper notes, the Obama administration has signalled that it is trying to avoid that day, and members of its economic team have made the case that during the Asian financial crisis in the 1990s that governments make lousy bank managers.