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This morning, President Bush announced that the Treasury Department would take a $250 billion stake in U.S. banks. The money comes from the $700 billion bailout plan, which originally did not include any bank investment. USA Today reports, "The government will temporarily guarantee new loans between banks and offer to insure unlimited deposits in accounts that don't pay interest, such as checking accounts. The new guarantee goes beyond the $250,000 federal insurance that generally applies to bank deposits." (More on the FDIC's temporary liquidity program.)
The investment plan was explained yesterday to nine banks by Treasury Secretary Henry Paulson. the NY Times reports, "He essentially told the participants that they would have to accept government investment for the good of the American financial system." $125 billion will be injected into Citigroup ($25 billion), Bank of America ($25B), JPMorgan Chase ($25B), Wells Fargo ($25B), Goldman Sachs ($10B), Morgan Stanley ($10B), Bank of NY ($2-3B), and State Street ($2-3B), and the other half will go to smaller banks. The Wall Street Journal reports "some of the big banks were unhappy."
Bush said of the investment:
This new capital will help healthy banks continue making loans to businesses and consumers. And this new capital will help struggling banks fill the hole created by losses during the financial crisis, so they can resume lending and help spur job creation and economic growth. This is an essential short-term measure to ensure the viability of America's banking system. And the program is carefully designed to encourage banks to buy these shares back from the government when the markets stabilize and they can raise capital from private investors.He added, "It will take time for our efforts to have their full impact, but the American people can have confidence about our long-term economic future," and promised "we will return our economies to the path of growth and prosperity."
Other officials are currently giving further details about the plan. Wall Street, which rallied 11% yesterday after a dismal week, may be set for another one today, as Asian and European markets continued their climbs.
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Does anyone really think just throwing taxpayer money at the problem will solve it?
Yesterday might have been on account that people are buying assets when the price was lower.
Does anyone really think just throwing taxpayer money at the problem will solve it?
When the only tool you have in your toolbox is a hammer the whole world looks like a nail.
Robbing Peter to pay Paul.
These are the same folks who are incapable of balancing their own budget.
And while they're making guarantees (like FDIC insurance up to 250G), why not guarantee that my Social Security benefits will be intact when I need to draw from them? The same Social Security program I have been paying into for 30 years now - and will (forcibly) be paying into for years to come.
Wait, what? Didn't Paulson just a few weeks ago condemn this sort of action in a bailout plan?
So we easily can shell out a trillion dollars over the course of three weeks to bail out capitalists, spend 720 million dollars EACH DAY on the Iraq war, but yet we have no money for social security or a national healthcare system???
Plenty of money to make sure the rich stay rich, and plenty of money for military and petrochemical industry contractors, but no money, OUR MONEY, for us taxpayers. That's GOP math for ya.
I have to say that the idea of investing into banks is a much better idea than what they been trying to push for before.
Instead of buying crap off the banks' books with taxpayers money - essentially taxpayers paying for banks' mistakes - the government is essentially assuring investors that everything would be OK in the long run. Also important that they are getting preferred shares. Which is good because a) it is guaranteeing higher dividends, so the taxpayers would be something is return, and b) gives the government a non-voting stake, so we won't turn into a planned-economy country where the govt controls the commerce.
"And while they're making guarantees (like FDIC insurance up to 250G), why not guarantee that my Social Security benefits will be intact when I need to draw from them?"
Technically, that guarantee is already in place. But I could shit in a box, slap a guarantee on it, and all you'd have is a guaranteed piece of shit.
Which is probably what we will all end up with.
Bush keeps making statements and no one is listening.
Social Security will be scrapped to pay for all this. Put your money in the stock market...er, or not.