U.S. will buy partial ownership in American banks

[jmc247]

WASHINGTON - Treasury Secretary Henry Paulson said Friday that the Bush administration will move ahead with a plan to buy stock in financial institutions.

Paulson said the program to purchase stock in financial institutions will be open to a broad array of institutions.

The administration received the authority to make direct purchases of stock in banks in the $700 billion measure Congress passed last week to rescue the nation's financial system.

It would mark the first time the government has taken equity ownership in banks in this manner since a similar program was employed during the Great Depression.

Paulson said the administration was moving forward with the program during a news conference at the conclusion of discussions among finance officials of the Group of Seven major industrialized countries. That group endorsed the outlines of a sweeping program to combat the worst global credit crisis in decades.

"As we develop plans to purchase equity ... we are working to develop a standardized program that is open to a broad array of financial institutions," Paulson said in a statement.

http://www.msnbc.msn.com/id/27123491


I am very interested to see what comes out of the G7 meeting this weekend. These really are the most significant changes in the governments role in the economy since the early 1930s.

[Batgirl]

Okay, I don't really watch the news too much, and I have no idea...What exactly IS the $700 billion dollar plan?

[Adam C]

Okay, I don't really watch the news too much, and I have no idea...What exactly IS the $700 billion dollar plan?

More government intervention in the economy to save us from the results of the Republicans wanting less government intervention in the economy. Funny how that works.

[king mob]

Blimey, Gordon Brown actually convinced Bush to do this!

[Adam C]

Blimey, Gordon Brown actually convinced Bush to do this!

He did...?

[mikekerr3]

He did...?

Looks like it that what the EU countries are already doing, we are just slow off the mark.

[Omega Alpha]

In a few years, government will be spending too much and then will sell everything they are buying now. Some decades later, there will be a huge crisis and the government will buy those same banks again.

Yeah, I'm a genius. Now, gimme your money for this accurate economic prediction.

[jmc247]

More government intervention in the economy to save us from the results of the Republicans wanting less government intervention in the economy. Funny how that works.

While I agree with you that the Republicans in Congress helped to torpedo Bush's 2003 planned major regulatory overhaul of the financial sector, the Democrats in Congress also helped to kill all the major regulatory changes that Bush proposed on the finance industry. And, both parties worked together on the 1999 Gramm-Leach-Bliley Act of 1999 that de-regulated much of the financial industry.

From the New York Times from September 11th 2003

New Agency Proposed to Oversee Freddie Mac and Fannie Mae

The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.

Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.

The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.

The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.

''There is a general recognition that the supervisory system for housing-related government-sponsored enterprises neither has the tools, nor the stature, to deal effectively with the current size, complexity and importance of these enterprises,'' Treasury Secretary John W. Snow told the House Financial Services Committee in an appearance with Housing Secretary Mel Martinez, who also backed the plan.

http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B 63&sec=&spon=&pagewanted=print


Much of the Republican party can be blamed for not trying to take action to regulate the financial sector and stopping any new proposed regulations. Nevertheless, Bush is actually one of the very few Republicans that can't be blamed for not trying to take significant action to deal with the growing problem. Of course he is ironically the man getting the most blame right now from Americans for the financial mess.

Reagan said government is the problem not the solution and alot of Republicans to this day believe that. Bush has very much believed the opposite that government is the solution to all the major domestic and foreign policy problems of the world. Obama has a line accusing Bush of being an anti regulation/hands off the economy Hoover like Republican and everytime he says it I just have to laugh. Bush has been the most supportive Republican President in pushing for government intervention in the economy in U.S. history and is up there with FDR and LBJ for growing governmental size and power.

Historians 40 years from now will laugh at someone telling them that Bush was an anti government intervention/hands off the economy Republican. But, I am betting the U.S. public believes it for the next few years.

[Fenris]

More government intervention in the economy to save us from the results of the Republicans wanting less government intervention in the economy. Funny how that works.

Um... I guess.

Although blaming the crisis on an excess of Republican libertarianism seems a little odd, since Bush is probably the least libertarian President since LBJ.

õ
In some rather different ways!

[Michael P]

Um... I guess.

Although blaming the crisis on an excess of Republican libertarianism seems a little odd, since Bush is probably the least libertarian President since LBJ.

õ
In some rather different ways!

Bush is only un-libertarian when it comes to people who aren't rich.

[Fenris]

Bush is only un-libertarian when it comes to people who aren't rich.

Hm. It sounds good, but I don't think it works. The Patriot Act isn't particularly focused on income levels, after all.

It applies to tax policy; but as long as we're running massive deficit spending, any kind of "tax cut" is just a figure of speech. Taxes haven't been cut at all, they've just been deferred with interest, and they will have to be paid.

Was that the kind of thing you were thinking of, or is it something else?

õ
Or many somethings else!

[Sean Walsh]

Okay, I don't really watch the news too much, and I have no idea...What exactly IS the $700 billion dollar plan?

The sound of hundreds of stupid politicians touching themselves?

[o1pickleboy]

While I agree with you that the Republicans in Congress helped to torpedo Bush's 2003 planned major regulatory overhaul of the financial sector, the Democrats in Congress also helped to kill all the major regulatory changes that Bush proposed on the finance industry. And, both parties worked together on the 1999 Gramm-Leach-Bliley Act of 1999 that de-regulated much of the financial industry.

From the New York Times from September 11th 2003



Much of the Republican party can be blamed for not trying to take action to regulate the financial sector and stopping any new proposed regulations. Nevertheless, Bush is actually one of the very few Republicans that can't be blamed for not trying to take significant action to deal with the growing problem. Of course he is ironically the man getting the most blame right now from Americans for the financial mess.

Reagan said government is the problem not the solution and alot of Republicans to this day believe that. Bush has very much believed the opposite that government is the solution to all the major domestic and foreign policy problems of the world. Obama has a line accusing Bush of being an anti regulation/hands off the economy Hoover like Republican and everytime he says it I just have to laugh. Bush has been the most supportive Republican President in pushing for government intervention in the economy in U.S. history and is up there with FDR and LBJ for growing governmental size and power.

Historians 40 years from now will laugh at someone telling them that Bush was an anti government intervention/hands off the economy Republican. But, I am betting the U.S. public believes it for the next few years.



I can see why congress had a big problem with the freddie and fannie overhaul plan. It gave overslight to the executive branch, which at that time was lead by hmm Oh Bush. Like anyone wanted to give Georgie anymore power.

[Jack Zodiac]

I flipped on CNN earlier this morning and saw something about the Fed offering three banks unlimited credit. It was only on screen for a minute, but I'm assuming that this is related to the government buying up certain banks and completely managing them on a financial level. If that's the case, yeah, I'd have to say Omega Alpha's prophetic words are pretty dead on. In the mean time, it'll be helpful for a few banks to offer more lines of credit and loans to the people who need to be helped out by this bail out plan but aren't, but they'll be right the fuck back to where they are now in a decade.

[Adam C]

Hm. It sounds good, but I don't think it works. The Patriot Act isn't particularly focused on income levels, after all.

No, but the tax cuts and the housing deregulation were. And even in Iraq, the stuff that Halliburton has gotten away with because the administration gave American contractors in Iraq complete immunity follows this pattern. I agree that he's the least libertarian President, but like most authoritarians his policies were designed for the benefit of elites, namely those whom he is close to politically or reflect his backgroudn. (Excluding left-wing authoritarians, though in practice their policies become about replacing existing elites with an entirely new elite.)

[StoneGold]

Um... I guess.

Although blaming the crisis on an excess of Republican libertarianism seems a little odd, since Bush is probably the least libertarian President since LBJ.

õ
In some rather different ways!

In actions, sure. In rhetoric, not so much. Funny how that works.