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U.S. Considers Buying Ownership Stakes in Banks
By
Jen Chung
Published Oct 9, 2008
Modified Oct 9, 2008
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By
Jen Chung
Published Oct 9, 2008
Modified Oct 9, 2008
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Photograph of the board at the New York Stock Exchange at yesterday's close by Richard Drew/AP
After stocks continued to slide yesterday amid worries over the credit crisis, the Treasury Department is thinking about buying stakes in U.S. banks to restore confidence. According to the NY Times, "Treasury officials say the just-passed $700 billion bailout bill gives them the authority to inject cash directly into banks that request it."
Treasury Secretary Henry Paulson said yesterday, "It is the policy of the federal government to use all resources at its disposal to make our financial system stronger. We will use all of the tools we've been given to maximum effectiveness, including strengthening the capitalization of financial institutions of every size.'' The Treasury wants banks to "recapitalize and begin lending" again, and the Wall Street Journal says the fact these discussions are even happening "is an indication of how the crisis is constantly morphing." (Treasury wasn't thinking of ownership a few days ago.)
CNBC and Bloomberg News think the market will rise today, due to IBM beating estimates and "investors speculated market declines were overdone." In the past six days, stock indexes have fallen by more than 15%.
Tagged
bailout
banks
credit crisis
economy
treasury department
Jen Chung
Jen Chung is a former WNYC and Gothamist editor.
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Gothamist is funded by sponsors and member donations
Gothamist is funded by sponsors and member donations
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