U.S. Sen. Lindsey Graham says the idea of a government takeover of private banks -- once considered a radical proposal -- might be the best solution for the financial industry's problems.

Graham, a South Carolina Republican, made the comments Sunday on ABC's "This Week" program.

"I would not take off the idea of nationalizing the banks," Graham, who sits on the Senate Budget Committee, told George Stephanopoulos on Sunday's program.

"This idea of nationalizing banks is not comfortable, but I think we have gotten so many toxic assets spread throughout the banking and financial community throughout the world, that we're going to have to do something that no one ever envisioned a year ago -- something no one likes," Graham said.

Graham did not name any banks when he made the "toxic" assets comment, but Charlotte-based Bank of America Corp.'s stock price dropped earlier this month after speculation that the government might seize the company.

The U.S. government already has agreed to invest $45 billion in the bank. It has also agreed to protect the bank from losses on $118 billion of loans and securities after it bought Merrill Lynch & Company.

"The fact that Lindsey Graham, a conservative Republican, says that nationalization should be on the table, I think underscores the sense of crisis," Stuart Rothenberg, editor of The Rothenberg Political Report, told ABC News. "And that could give the president a good deal of political capital and leeway."

However, President Obama last week dismissed the idea of a government takeover of banks.

"We want to retain a strong sense of private capital, fulfilling the core investment needs of this country," Obama told ABC's "Nightline" program.

Some prominent economists, including Nobel Prize winner Paul Krugman, say nationalizing the banks might be the only way out of the current financial crisis, since the nation's largest banks are carrying half a trillion dollars in bad debt.

Krugman told ABC, "The chances of your being able to do this without nationalizing at least a couple of really troubled banks are not too good."

Not everyone in Congress agrees with Graham.

Another leader on the ABC "This Week" program, Sen. Charles Schumer, D-N.Y., said he opposes the idea.

"I think government is not good at making these decisions as to who gets loans and how this happens," Schumer said.

The Obama administration this week is examining the nation's leading banks, to determine their approximate level of trouble. Krugman said he expects federal officials to give serious consideration to nationalizing the banks after examining the lenders' debt loads.

ABC News and Bloomberg News contributed

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