This one is important.
This had better have a much better plan and exit strategy than Iraq or the implications will be far worse.
Report: U.S. Considering Taking Ownership Stake in Banks
Wednesday, October 08, 2008
The U.S. Treasury Department is considering taking ownership stakes in many U.S. banks in a bid to restore confidence in the badly shaken financial system, the New York Times reported on its Web site Wednesday night.
The moves may come after the Treasury has had little success in unlocking frozen credit markets, The Times said, quoting unnamed 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, and the right to take ownership positions in those banks, the newspaper said.
Such a move would quickly strengthen banks' balance sheets and, officials hope, persuade them to resume lending, the Times said.
The Treasury plan, still preliminary, resembles one announced on Wednesday in Britain.
The American recapitalization plan, officials say, has emerged as one of the most favored new options being discussed in Washington and on Wall Street, according to the Times.
The gloomy market response to Wednesday's globally coordinated interest rate cuts by central banks sent policy makers and outside experts on a scramble for additional remedies to stabilize the banks and reassure investors, the Times said.
Treasury officials worry that aggressive government purchases, if not done properly, could alarm bank shareholders by appearing to be punitive or could be interpreted by the market as a sign that target banks were failing, the Times said.
The idea is gaining support even among longtime Republican policy makers who have spent most of their careers defending laissez-faire economic policies, according to the report.
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