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| White House considers ownership stakes in banks |
| 2008-10-09 |
| The Bush administration is considering taking ownership stakes in certain U.S. banks as an option for dealing with a severe global credit crisis. An administration official, who spoke on condition of anonymity because no decision has been made, said the $700 billion rescue package passed by Congress last week allows the Treasury Department to inject fresh capital into financial institutions and get ownership shares in return. This official said all the new powers granted in the legislation were being considered as the administration seeks to deal with a serious credit crisis that has caused the biggest upheavals on Wall Street in seven decades and continues to roil global markets. Supporters of this approach, such as Sen. Charles Schumer, D-N.Y., argue that injecting fresh capital into U.S. banks who want to participate in the program would be an effective way to bolster banks' balance sheets and get them to resume lending. Taxpayers would benefit because the government would receive an equity stake in the bank in return for providing the capital. "This idea would, at a minimum, complement the administration's planned approach of buying up troubled assets and may prove to be the most promising tool of all in Secretary Paulson's kit," Schumer said in a statement. A decision to inject capital directly into financial institutions in return for ownership stakes would be similar to a plan announced Wednesday by Britain. ... |
| Posted by:ed |
| #4 The national government has been a central player since the Constitution gave the fed’s the monopoly on minting/printing money. Back in those day, and pretty much the 19th Century, if it wasn’t gold or silver, it wasn’t money. So, the government influenced the economy by the availability of the stuff in could get into the market system. The Bank of the United States was one of the mechanisms to do that and remained so till a feud between its director and Andrew Jackson saw it killed. So, we’ve had a national bank before there was even a concept in Karl Marx’s little brain. Since then we’ve had panics, recessions, a Depression, and various and repetitive shots at regulations. Human nature being what it is, you’re not going to get a pure laissez faire system and we can perceive that single state banking/market system isn‘t a winner either. Humans have a habit of trying to influence or control their environment. The economic one being no different. What the government can do is set a bench mark for the rest of the business to compete against. If they beat it, good. If they can’t, then they have to take the riskier side of the market or go out of business. For the pubic, it becomes a trade off between lower return and security versus higher return and risk. Right now we have a library full of regulations and federal program offices that could be consolidated by creating a benchmark for competition rather than multiple bureaucracies whose basic objectives are the same. |
| Posted by: Procopius2k 2008-10-09 13:55 |
| #3 Are we, or at least our financial system, communist now? I'm confused, central state run financial systems are indicative of communist countries, aren't they? Does this move really fit our economic model? What is happening? |
| Posted by: bigjim-ky 2008-10-09 10:57 |
| #2 The Euro-Ruski nesting doll model. Everything belongs inside the state. How very ingenious of Sen. Schumer. |
| Posted by: Besoeker 2008-10-09 10:26 |
| #1 And how much will the 'middleman' get to skim off the 'infusion'? Do it yourself and cut out the middleman. Taxpayers would benefit because the government would receive an equity stake in the bank in return for providing the capital What's the equity stake of 0? What's the equity stake of owning the whole friggin bank? |
| Posted by: Procopius2k 2008-10-09 09:34 |