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Posted on 10/09/2008 8:30:34 AM PDT by rabscuttle385
WASHINGTON—The Treasury Department is considering ways to inject capital directly into banks, possibly by taking equity stakes, as the financial crisis continues to worsen.
Treasury Secretary Henry Paulson, in a marked shift in rhetoric, played up Treasury's newfound authority to "to inject capital into financial institutions" in remarks Wednesday. Mr. Paulson, who won approval from Congress to buy $700 billion worth of distressed assets, had previously focused on Treasury's plan to buy mortgage-related securities from financial institutions that are having trouble getting the assets off their books.
As the financial crisis continues to escalate, Treasury has begun fleshing out ways to use its authority to make direct injections into financial institutions, according to a person familiar with the matter. Treasury is figuring out how to structure such infusions so that banks can recapitalize and begin lending.
No such moves are imminent, but the fact that the department is engaging in such discussions is an indication of how the crisis is constantly morphing. Such a move was not under consideration just a few days ago but has become more of a possibility in recent days as the stock market has plunged and the credit crunch shows no signs of easing.
Treasury wants to design something voluntary that encourages healthy institutions to participate. Treasury is discussing whether to buy preferred stock or find some other way to inject capital into the firms.
(Excerpt) Read more at online.wsj.com ...
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This is getting out of control.
Was it ever under control to begin with?
These retarded conniving socialists need to be stopped in their tracks. What the hell is this, the USSR???
STOP THE BAILOUT
http://www.petitiononline.com/mod_perl/signed.cgi?Nobail1&1
The bigger question is...Who's in YOUR wallet?
(And the answer is: Uncle Sam.)
The purchase of preferred stock for the taxpayers is a far better option, and will immediately put capital in the banks to loan...it will also give the taxpayers a ‘FREE MARKET’ USE of TAXPAYER DOLLARS...not a socialist answer..I like this use of money. Invest in America and make a return by selling the preferred stock at a later date and be done with it. The stock purchase is immediate capital for bank and with stock as collateral for moeny it is sure return on money. I like it.
It’s totally out of control and there’s not a damn thing we can do about. We’re supposed to suck it up and lose our life savings. Looks like they want to control our 401ks too.
I have witnessed Compassionate Conservatism and it has been found wanting.
I disagree.
If the bank cannot get investment from other places, there might be a reason for that. ‘Bad’ investment.
Yep! and it doesn’t “screw the shareholders”...it saves them from certain bankruptcy..Fed’s trying to save some of them.....
It worked for Buffet.
The turning point was the GOP switch on the bailout. Now....its pretty much a lost cause for the next few years. McCain, and the GOP, could have stopped this but they sold us out.
Bingo. I've been wondering why Hank Putin didn't start with this plan (other then he was letting his buddies gobble up the spoils).
Buffett has preferred shares in Goldman for $5 billion that pay him a dividend of $500 million / year and he can get an upside equity stake. This $5 billion in equity lets Goldman lend $50 billion. Buying toxic assets only allow them to loan on a 1 to 1 ratio, not a 10 to 1 ratio. But, the bailout still sucks!
THe lilly livered GOP moderates are as bad as the democrats. That includes McCain.
I agree, buying securities makes no sense, doesn’t help the balance sheet and doesn’t unfreeze lending to the seller. But buying a few trillion in equity both public and private would bypass the whole banking mess and inject money into the economy where it is needed.
The lack of capital is most of banks problems, due to the MBS’s...which US govt was going to buy..but they are also time consuming to sort out and sell...I like the stock option, and think it is much more a ‘free market capital’ solution...it is good idea, along with some purchase of the MBS’s.
There are very few direct quotes from Paulsen in this article.
The author may very well be twisting his comments to fit his own liberal agenda. Liberals want to see the warrants idea gain traction; their idol Schumer is pushing it today.
The Dems are the ones who put it in the bailout bill as an option.
I wish people here would get smarter.
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