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U.S. Forces Nine Major Banks To Accept Partial Nationalization - washingtonpost.com

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U.S. Forces Nine Major Banks To Accept Partial Nationalization - washingtonpost.com
Topic: Business 5:30 am EDT, Oct 14, 2008

In pressing the bank executives to accept partial government ownership, Paulson's message was clear: Though officially the program was voluntary, the banks had little choice in the matter. In exchange for giving the Treasury minority stakes, the nine firms would jointly receive an investment worth $125 billion. The government would make another $125 billion available for the next 30 days to thousands of other banks and thrifts across the country. null

This is potentially good, but also potentially dangerous. The government stake is good, in that it can be used to block banks from doing things that are insane (credit default swaps anyone?). The government stake is dangerous in the sense that it may now be in a position to force banks to do incredibly stupid things (credit default swaps or massive sub-prime secondary loans?). The next step is still anyone's game.

U.S. Forces Nine Major Banks To Accept Partial Nationalization - washingtonpost.com



 
 
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