For those that didn't have the pleasure of watching "Darby O'Gill and the Little People" every St. Patrick's Day growing up, I should explain that the banshee is a female spirit of Irish mythology that comes to collect those that are about to die. Though Darby and his little pal King Brian Connors manage to foil the banshee in the movie, investors don't seem so sure that the Bank of Ireland (NYSE:IRE) and Allied Irish Banks (NYSE:AIB) will be able to do the same now that Anglo Irish Bank has been nationalized by the Irish government.

With the luxury of the Monday morning quarterback chair, it's pretty easy to say that it was not only ill-advised, but downright reckless to allow banks to rack up such massive leverage. In the case of many banks -- and we're talking U.S. banks like Bank of America (NYSE:BAC) and Citigroup (NYSE:C), as well as U.K. banks like Royal Bank of Scotland (NYSE:RBS) and, of course, the Irish banks -- gargantuan piles of assets were stacked on relatively slim slivers of equity. This meant that a sizeable hit to one of these banks' asset bases could easily wipe out all of its equity and then some.

Of course there's an argument for allowing banks to maintain that much leverage, but it's hard to imagine that argument holding up unless risk was kept to a minimum and transparency was kept at a maximum. Again, from the comfort of our rearview mirror, we can see that neither was the case and now investors are left grasping at straws when it comes to the future of these banks. Sure, Irish government officials have said they have the firm intention to keep Bank of Ireland and Allied Irish in private hands, but should we really be convinced at this point that they have some special insight that guarantees this?

At this point the equity shares of most large banks have become options on the potential for their ongoing survival as privately owned entities. Bank of Ireland is trading at less than $2 and is down 97% from its 52-week peak, Allied Irish's stock is under $1.50 and is also off 97% from its high, and Citigroup is trading at $3 and change and has shed nearly 95% from its mid-2007 peak. And I could go on and on with the list.

If any (or all) of these banks are able to shake off the wails of the banshee -- or, in Ireland's case, fear of nationalization -- and get back to some state of normalcy, investors could see hefty gains from today's prices. But if there's anything the banshee does well, it's persistence, and when the only certainty out there is continued uncertainty, investors will be best served treading carefully around major bank stocks -- Irish or otherwise.

Further financial Foolishness:

Allied Irish Banks is a Motley Fool Global Gains selection. Bank of America is a former Motley Fool Income Investor pick. The Fool owns shares of Allied Irish Banks. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Matt Koppenheffer could use a King Brian Connors of his own right now to help him navigate this market. Matt owns shares of Bank of America, but does not own shares of any of the other companies mentioned. The Fool's disclosure policy has never once been caught with its pants down. Of course, it doesn't actually wear pants ...