Bloggers were buzzing today after a report led some to believe that banks were lobbying for the ability to buy their own assets in the Federal Deposit Insurance Corp.´s Public Private Investment Partnership program.
"Here we have a trillion-dollar bailout program (on top of the many other trillion-dollar bailout programs) to get banks out of the deep holes they´ve dug themselves. Not only do they want their, um, dirt shoveled, they want to get paid for shoveling it," read a post on Columbia Journalism Review´s The Audit.
There was just one problem: It wasn´t true.
FDIC Chairman Sheila Bair was blunt at a press conference in dismissing the idea.
"Banks will not be able to bid on their own assets," she said, though she acknowledged, "There has been some confusion about that."
A close read of the Wall Street Journal story that started the dust-up makes it clear that the newspaper was talking about banks being able to bid on other banks´ assets - an idea that has been out there for almost two months, and was reported by American Banker on April 7.
That idea is still a possibility, but Bair warned today that there may be less interest in the program due to recent capital raising by banks.
"The good news is, banks have been able to raise a lot of new capital, even before taking more aggressive steps to cleanse their balance sheets, so the incentives to sell may be less, but that´s for good reasons," she said.