Treasury Secretary Henry Paulson said on Friday that the U.S. government was working on a plan to buy stock in financial institutions by using part of the $700 billion authorized by Congress to stabilize the financial system.
"We are working to develop a standardized program that is open to a broad array of financial institutions," Paulson said.
"Such a program would be designed to encourage the raising of new private capital to complement public capital," he said following a meeting of G-7 finance ministers and central bankers.
Positively Orwellian, Mr. Paulson. On Sunday some truth slipped through, though ...
Treasury Secretary Henry Paulson told international leaders on Sunday that isolationism and protectionism could worsen the spreading financial crisis. With a new trading week dawning, U.S. lawmakers urged quick action by the Bush administration on measures to make direct purchases of bank stock to help unlock lending.
Sen. Chuck Schumer, chairman of the Joint Economic Committee, said an administration proposal to inject federal money directly into certain banks, in effect partially nationalizing the banking system, “is gaining steam.”
“I am hopeful that tomorrow, the Treasury will announce that they’re doing it. And they have to do it quickly ... markets are waiting,” Schumer, D-N.Y., said.
And then yesterday ...
Treasury Secretary Henry M. Paulson Jr. outlined the plan to nine of the nation’s leading bankers at an afternoon meeting, officials said. He essentially told the participants that they would have to accept government investment for the good of the American financial system.
Of the $250 billion, which will come from the $700 billion bailout approved by Congress, half is to be injected into nine big banks, including Citigroup, Bank of America, Wells Fargo, Goldman Sachs and JPMorgan Chase, officials said. The other half is to go to smaller banks and thrifts. The investments will be structured so that the government can benefit from a rebound in the banks’ fortunes.
Well at least the stock market liked the idea (those damned Social Fascists):
The Dow Jones industrial average gained 936 points, or 11 percent, the largest single-day gain in the American stock market since the 1930s. The surge stretched around the globe: in Paris and Frankfurt, stocks had their biggest one-day gains ever, responding to news of similar multibillion-dollar rescue packages by the French and German governments.
See, the genuine banking experts -- the ones in Europe -- told the U.S. (as in 'us') that we had to do this, because they couldn't stand to watch Henry Paulson and George W Bush screw up the bailout, too:
First you mess up the world's financial system. Then you blow the rescue of it. Now let's show you how to do it properly.
That, in a nutshell, is the less-than-flattering message European governments are sending to the U.S. as they mount their own gigantic bank bailout. The plans, announced Monday after two weeks of dithering, involve Britain, Germany, France and some others recapitalizing national banks that require help, and providing state guarantees and other measures to kick-start the stalled credit market. The details are strikingly different from the U.S. approach adopted by U.S. Treasury Secretary Hank Paulson and the Federal Reserve Board. And there's a big reason for that: The Europeans think Paulson got it badly wrong, and have watched aghast as he failed to restore confidence in the world's financial system.
Doesn't anybody besides me think that Hugo Chavez has the more sensible approach to nationalizing industry within Venezuela? He just takes it over, he doesn't pay anything for it or assume any of its debt.
Barack Obama could never be the socialist that George W Bush has proven himself to be. Not even if he successfully nationalizes health care (something the American people actually want to see happen).
So to review, two things happened yesterday that hadn't happened since the 1930s: the government took over the banks, and the stock market promptly went up nearly a thousand points.
Woo Hoo! We have staved off a
depression recession. And if you buy that, I've got some newspaper companies and automobile manufacturers for sale real cheap, too.