[frankthetank]

This is just getting better...

AN FRANCISCO (MarketWatch) -- In another attempt to loosen credit markets and restore confidence in the financial system, the Treasury Department is considering a plan to take ownership stakes in many U.S. banks, both healthy and troubled, according to a media report Wednesday night.
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 New York Times reported in its online edition in a story citing unnamed government officials.
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 the U.K. See story
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

[Micki]

Fed is one of the biggest insurers.
Treasury soon to be one of the biggest bankers.
Treasury already large holder of mortgages.

And here comes McCain from left field and he pushes a totally new idea.
A $300billion dollar bailout plan to rescue individual mortgage holders in trouble.

C'mon Obama...you want to win??? Offer something better..$400 Billion, do we have $400Billion?

White House hopeful John McCain pitched a $300 billion plan to help struggling homeowners on Wednesday as he tried to erode an advantage held by Democratic rival Barack Obama on economic issues
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McCain offered more details on Wednesday on a plan he suggested in Nashville to have the government buy up troubled loans from people who have seen their home values fall below their debt. The loans would then be structured into more affordable mortgages.

"Under my orders as president, the secretary of the Treasury will carry out a home ownership resurgence plan,"
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"John McCain wants the government to massively overpay for mortgages in a plan that would guarantee taxpayers lose money, and put them at risk of losing even more if home values don't recover," said Jason Furman, economic adviser to Obama.

REUTERS

[Tyler_JC]

This is terrible news for shareholders.

If the Government takes a stake in your bank, that means diluting the S*** out of current stakeholders.

Ask anyone at AIG, the government bought 80% of the company for $80 billion. They didn't buy shares on the open market. The company was forced to issue new shares, heavily diluting existing shares.

The companies will survive but the equity holders get almost completely wiped out.

[oswald622]

crucial step toward fascism.

[hironegro]

Will this stablize the credit market fianlly?

[Cashmere]

crucial step toward fascism.

Very astute. Agreed.

[Starvid]

They should have done this from the beginning, instead of doing the questionable Paulson plan. Nationalisation seems to be the only workable solution.

[Gebari]

Blimey, the TED spread just hit another high - now above 4.11. The bank lending situation is seizing up even more, despite continued government actions. The situation is still deteriorating. The TED spread is the thing to watch, rather than the stock markets.

[heroineworshipper]

And the voters keep voting for bigger government, more social programs, more powerful leaders, more taxes. It's part of human genetics.

[Roccland]

They should have done this from the beginning, instead of doing the questionable Paulson plan. Nationalisation seems to be the only workable solution.

JPMorgan is the establishment.

This should not be a shock if one has been paying attention.

[mattduke]

They should have done this from the beginning, instead of doing the questionable Paulson plan. Nationalisation seems to be the only workable solution.

Eliminate the Fed.
Outlaw fractional reserve banking.
That is the solution.
Your "solution" will lead to the much greater ordeal of hyperinflation.

1. Government creates problem by lowering interest rate.
2. Problem happens.
3. Government intervenes to "solve" problem, acquiring more power to
create bigger problems.
4. Repeat until totalitarian.

[Starvid]

They should have done this from the beginning, instead of doing the questionable Paulson plan. Nationalisation seems to be the only workable solution.

Eliminate the Fed.
Outlaw fractional reserve banking.
That is the solution.
Your "solution" will lead to the much greater ordeal of hyperinflation.

1. Government creates problem by lowering interest rate.
2. Problem happens.
3. Government intervenes to "solve" problem, acquiring more power to
create bigger problems.
4. Repeat until totalitarian.

We didn't get hyperinflation or totalitarianism over here when we solved our credit crisis by injecting equity 15 years ago.

So why should you?

[Starvid]

They should have done this from the beginning, instead of doing the questionable Paulson plan. Nationalisation seems to be the only workable solution.

JPMorgan is the establishment.

This should not be a shock if one has been paying attention.

I don't follow your argument, if there even is one.

Care to clarify?

[Micki]

They should have done this from the beginning, instead of doing the questionable Paulson plan. Nationalisation seems to be the only workable solution.

Eliminate the Fed.
Outlaw fractional reserve banking.
That is the solution.
Your "solution" will lead to the much greater ordeal of hyperinflation.

1. Government creates problem by lowering interest rate.
2. Problem happens.
3. Government intervenes to "solve" problem, acquiring more power to
create bigger problems.
4. Repeat until totalitarian.

We didn't get hyperinflation or totalitarianism over here when we solved our credit crisis by injecting equity 15 years ago.

So why should you?

No, but wasn't that the time when krona had to be floated overnight interest rates wen't up to 100% to stop the currency from going through the floor.