Thursday, October 09, 2008

NY Times: Recapitalization Plan Being Considered

by Calculated Risk on 10/09/2008 12:45:00 AM

From the NY Times: U.S. May Take Ownership Stake in Banks

Having tried without success to unlock frozen credit markets, the Treasury Department is considering taking ownership stakes in many United States banks to try to restore confidence in the financial system ...

Treasury officials say the just-passed $700 billion bailout bill gives them the authority to inject cash directly into banks that request it. Such a move would quickly strengthen banks’ balance sheets and, officials hope, persuade them to resume lending. In return, the law gives the Treasury the right to take ownership positions in banks, including healthy ones.

The proposal resembles one announced on Wednesday in Britain.
This would essentially be the plan supported by most economists.