« SCOTUS rejects death row inmate's "I'm too fat to die" claims | Main | ACLU Pressuring Registrars in Virginia to Illegally Allow Out-of-State College Students to Vote in Virginia »
October 14, 2008

US Buys Stock In Banks

The bailout money is starting to flow from the Treasury and all I can say is, congratulations fellow shareholders!

The president said the decision to to buy shares in the nation's leading banks — a kind of federal intervention not seen since the Depression era — was "not intended to take over the free market but to preserve it."

Said Treasury Secretary Henry Paulson: "We regret having to take these actions. Today's actions are not what we ever wanted to do — but today's actions are what we must do to restore confidence to our financial system."

…Under the new multifaceted stabilization program described Tuesday, the government will initially buy stocks in nine major U.S. banks. When financial markets stabilize and recover, the banks are expected to buy the stock back from the government, Bush said in brief remarks from the White House Rose Garden.

… The administration plans to spend $250 billion this year on the stock purchases and the president certified Tuesday that another $100 billion would be needed in connection with covering bad assets. That would leave $350 billion of the $700 billion program, presumably to be spent by the next president.

The move follows similar actions in the UK.

I’m not going to pretend to know if this is going to work. It’s definitely a drastic step and one can only hope it works out in the end.

MORE: Were banks reluctant to participate and will they use the money the way the government wants?


The Washington Post has a wrap and apparently banks were not thrilled with the plan and it's far from certain how the money will be used.

In pressing the bank executives to accept partial government ownership, Paulson's message was clear: Though officially the program was voluntary, the banks had little choice in the matter. In exchange for giving the Treasury minority stakes, the nine firms would jointly receive an investment worth $125 billion. The government would make another $125 billion available for the next 30 days to thousands of other banks and thrifts across the country.

...There is a risk that banks will take the new government capital and use it to bolster their balance sheets but still not resume lending, and the Treasury is not getting any specific contractual guarantee to prevent that from happening. But bank regulators, particularly the Federal Reserve, will lean heavily on the firms receiving infusions to use the capital to increase their lending to businesses and consumers.

Letting the financial system seize up and collapse in the name of ideological purity is simply not an option. There is however no guarantee Paulson and the folks at Treasury will have any better luck in undoing this mess than the market did.

We clearly aren't even remotely out of the woods yet.

digg this
posted by DrewM. at 02:31 PM

| Access Comments




Recent Comments
Insomniac - Getting Microaggressed on the Daily, Yo!: "Another good one for the Food Thread. Anyone famil ..."

Sandra F.: "[i]That means they're really being hard if Jimmy c ..."

Mike Hammer, etc., etc.: "Are we now lactophilia intolerant? Posted by: buz ..."

Lost Shaker Assault: "I've been a chef, cook, and restaurant manager 35 ..."

Donna&&&&V sez: Sorry Tribe fans. Go Astros!: "Not entirely OT, here is a vid of some sane - and ..."

Cosmic Charlie: "Tina Weymouth was extraordinary ..."

buzzsaw90: "One word: lactophilia. And celebrity chefs. Pu ..."

filbert: "[i]"Diversity" by itself is valueless. A bucket of ..."

Insomniac - Getting Microaggressed on the Daily, Yo!: "508 Let's face it, diversity is weakness, straight ..."

colfax mingo: "Eromero, Not a poet, but not a bullshitter eith ..."

Mike Hammer, etc., etc.: "It starts with lactophilia, then, the pudding. ..."

publius, the Persistent Poperin Pear: " Another good one for the Food Thread. Anyone fa ..."

Recent Entries
Search


MuNuvians
Polls! Polls! Polls!
Frequently Asked Questions
The (Almost) Complete Paul Anka Integrity Kick
Top Top Tens
Greatest Hitjobs

The Ace of Spades HQ Sex-for-Money Skankathon
A D&D Guide to the Democratic Candidates
Margaret Cho: Just Not Funny
More Margaret Cho Abuse
Margaret Cho: Still Not Funny
Iraqi Prisoner Claims He Was Raped... By Woman
Wonkette Announces "Morning Zoo" Format
John Kerry's "Plan" Causes Surrender of Moqtada al-Sadr's Militia
World Muslim Leaders Apologize for Nick Berg's Beheading
Michael Moore Goes on Lunchtime Manhattan Death-Spree
Milestone: Oliver Willis Posts 400th "Fake News Article" Referencing Britney Spears
Liberal Economists Rue a "New Decade of Greed"
Artificial Insouciance: Maureen Dowd's Word Processor Revolts Against Her Numbing Imbecility
Intelligence Officials Eye Blogs for Tips
They Done Found Us Out, Cletus: Intrepid Internet Detective Figures Out Our Master Plan
Shock: Josh Marshall Almost Mentions Sarin Discovery in Iraq
Leather-Clad Biker Freaks Terrorize Australian Town
When Clinton Was President, Torture Was Cool
What Wonkette Means When She Explains What Tina Brown Means
Wonkette's Stand-Up Act
Wankette HQ Gay-Rumors Du Jour
Here's What's Bugging Me: Goose and Slider
My Own Micah Wright Style Confession of Dishonesty
Outraged "Conservatives" React to the FMA
An On-Line Impression of Dennis Miller Having Sex with a Kodiak Bear
The Story the Rightwing Media Refuses to Report!
Our Lunch with David "Glengarry Glen Ross" Mamet
The House of Love: Paul Krugman
A Michael Moore Mystery (TM)
The Dowd-O-Matic!
Liberal Consistency and Other Myths
Kepler's Laws of Liberal Media Bias
John Kerry-- The Splunge! Candidate
"Divisive" Politics & "Attacks on Patriotism" (very long)
The Donkey ("The Raven" parody)
News/Chat
Archives
Powered by
Movable Type 2.64