Treasury May Take Ownership In Banks
WASHINGTON-The U.S. Treasury appears ready to go beyond simply buying hundreds of millions of dollars in heavily de-valued mortgage assets as a part of its effort to provide stability in the financial markets.
In a statement last week, Secretary Henry Paulson repeatedly touched on the Treasury's new authority to "to inject capital into financial institutions," taking ownership stakes in troubled banks. Congress approved the new powers as a part of its $700- billion bailout bill it passed on Oct. 3. Paulson said that the Treasury's efforts are necessary to preserve the health of the nation's financial system and increase "liquidity of our markets" which have been brought to a near standstill thanks to the credit freeze.
If the Treasury does move to directly capitalize US financial institutions, it would mirror a plan the U.K. put in place last week, when the British government offered $87 billion in cash to shore up Barclays, Royal Bank of Scotland and HSBC in exchange for non-voting preference shares.(c) 2008 Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com/ http://www.sourcemedia.com/
