Oct. 11 (Bloomberg) -- U.S. Treasury Secretary Henry Paulson indicated that pumping government funds into banks is a priority and said financial markets will remain volatile. ``We see the need -- a clear, present need -- to raise capital,'' Paulson said yesterday at a press conference after a meeting in Washington of finance ministers and central bankers from Group of Seven countries. The purchases of stock, the newest part of a rescue plan engineered by Paulson, would be aimed at sustaining banks and other financial institutions through the worst credit crisis in seven decades. The U.S. Congress last week passed legislation allowing the Treasury secretary to spend as much as $700 billion to buy mortgage securities and other troubled assets and to purchase equity in banks. Paulson declined yesterday to give a timetable or details about the purchases.
Oct. 11 (Bloomberg) -- U.S. Treasury Secretary Henry Paulson indicated that pumping government funds into banks is a priority and said financial markets will remain volatile.
``We see the need -- a clear, present need -- to raise capital,'' Paulson said yesterday at a press conference after a meeting in Washington of finance ministers and central bankers from Group of Seven countries.
The purchases of stock, the newest part of a rescue plan engineered by Paulson, would be aimed at sustaining banks and other financial institutions through the worst credit crisis in seven decades.
The U.S. Congress last week passed legislation allowing the Treasury secretary to spend as much as $700 billion to buy mortgage securities and other troubled assets and to purchase equity in banks. Paulson declined yesterday to give a timetable or details about the purchases.
BOSTON, Oct 11 (IPS) - The George W. Bush administration announced Friday evening it would buy shares in troubled U.S. banks, a move that upstages its own rigid, free-market ideology, and answers calls for the action by European leaders.Until now, the U.S. has resisted taking the action even though doing so would be a prudent plan for stabilising financial institutions, said Thomas Palley, founder of Economics for Democratic and Open Societies. "What you are really seeing is how ideology can get in the way of good policy. Republicans have been averse to gaining an equity stake in the banks," Palley told IPS. U.S. Treasury Secretary Henry Paulson made the announcement following a meeting with the finance ministers of the G7 richest nations, who said "urgent and exceptional action" is needed. The governments issued a brief, five-point plan for stabilising markets, including allowing banks to raise capital from public and private sources as necessary. "It is aimed at recapitalising the financial institutions in the U.S.," Paulson said. "We want to do this as soon as possible but we want it to be right and to be effective."
Two weeks after persuading Congress to let it spend $700 billion to buy distressed securities tied to mortgages, the Bush administration has put that idea aside in favor of a new approach that would have the government inject capital directly into the nation's banks -- in effect, partially nationalizing the industry. As recently as Sept. 23, senior officials had publicly derided proposals by Democrats to have the government take ownership stakes in banks. The Treasury Department's surprising turnaround on the issue of buying stock in banks, which has now become its primary focus, has raised questions about whether the administration squandered valuable time in trying to sell Congress on a plan that officials had failed to think through in advance. It has also raised questions about whether the administration's deep philosophical aversion to government ownership in private companies hindered its ability to look at all options for stabilizing the markets.Some experts also contend that Treasury's decision last month to not use taxpayer money to save Lehman Brothers worsened the panic that quickly metastasized into an international crisis.
Two weeks after persuading Congress to let it spend $700 billion to buy distressed securities tied to mortgages, the Bush administration has put that idea aside in favor of a new approach that would have the government inject capital directly into the nation's banks -- in effect, partially nationalizing the industry.
As recently as Sept. 23, senior officials had publicly derided proposals by Democrats to have the government take ownership stakes in banks.
The Treasury Department's surprising turnaround on the issue of buying stock in banks, which has now become its primary focus, has raised questions about whether the administration squandered valuable time in trying to sell Congress on a plan that officials had failed to think through in advance.
It has also raised questions about whether the administration's deep philosophical aversion to government ownership in private companies hindered its ability to look at all options for stabilizing the markets.
Some experts also contend that Treasury's decision last month to not use taxpayer money to save Lehman Brothers worsened the panic that quickly metastasized into an international crisis.
This is something that was not part of the Paulson plan (remember the 2 and a half pages?). Then, in what should be called the Dodd plan, Paulson kept saying he did not want it. Then when he had it anyway, he kept saying he didn't want to use it for two weeks.
How can they say it's part of a plan engineered by Paulson? That must be Neoliberal press Bullshit technology or something. Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi
