U.S. May Take Ownership Stake in Banks

[notverycrucial]

http://www.nytimes.com/2008/10/09/business/economy/09econ.html

WASHINGTON — Having tried without success to unlock frozen credit markets, the Treasury Department is considering taking ownership stakes in many United States banks to try to restore confidence in the financial system, according to government officials.

Treasury officials say the just-passed $700 billion bailout bill gives them the authority to inject cash directly into banks that request it. Such a move would quickly strengthen banks’ balance sheets and, officials hope, persuade them to resume lending. In return, the law gives the Treasury the right to take ownership positions in banks, including healthy ones.

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Devil is in the details, but this seems like a very big deal, no?

 

[KingNick865]

Sounds like what the UK did for it's banks.

 

[BigPapaVol]

http://www.nytimes.com/2008/10/09/business/economy/09econ.html



Devil is in the details, but this seems like a very big deal, no?

like the little detail about having been unsuccessful in unfreezing the credit markets. The author has no idea whether the credit markets will unfreeze. The law passed but hasn't been put to use at this point.

The fed is not going to be in the business of owning banks for the long term. The FDIC system gives them quasi ownership either way. They get to be dictatorial to an owner about how to operate his bank and how to allocate his capital, so what's the real difference"
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