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The US government will spend up to $250 billion to buy shares in struggling banks in the latest effort to stem a global financial crisis, Treasury Secretary Henry Paulson said overnight.
At a press conference in the Treasury's ornate Cash Room, Paulson announced that nine large financial institutions "have already agreed to participate in the program." In this program US government will spent $ 250 bln to get stake in banks. The half of this $250 bln means $125 bln will be invested in country most preffred bank alone and remaning $125 bln, which is the amount of the first tranche Congress authorized Treasury to spend—to be invested quickly in other banks. After that, Treasury would ask Congress to authorize the next $100 billion in funding it approved.
The announcement came the day after Paulson called in the heads of six major banks and pressed them to "voluntarily" back Treasury's plan to devote $250 billion of the $700 billion recently approved by Congress to buy direct equity stakes in financial institutions in return for senior preferred shares.Treasury Sec Mr Paulson said on Oct 14th banks that sell shares to the government will "accept restrictions" on executive compensation, including a ban on golden parachute exit agreements while the government holds the bank shares. Taxpayers will also get warrants for common shares. And the banks will be expected to "continue and to strengthen their efforts to help struggling homeowners who can afford their homes avoid foreclosure."
"Our goal is to see a wide array of healthy institutions sell preferred shares to the Treasury, and raise additional private capital, so that they can make more loans to businesses and consumers across the nation," Paulson said in the statement. "At a time when events naturally make even the most daring investors more risk-averse, the needs of our economy require that our financial institutions not take this new capital to hoard it, but to deploy it."
Who's Getting What
Among the firms expected to get funding: JPMorgan Chase (JPM), Citigroup (C), and Bank of America (BAC) were to receive $25 billion apiece; Wells Fargo (WFC) was to get between $20 billion and $25 billion; Goldman Sachs (GS) and Morgan Stanley (MS) were down for $10 billion each, and the Bank of New York (BK) and State Street (STT) were slated for $2 billion to $3 billion apiece. Citigroup and Goldman Sachs declined to comment on this news.
The substantial sums involved make clear that Uncle Sam could be on the way to owning a vast chunk of the U.S. banking sector.
Who's Said What
"Today we are taking decisive actions to protect the US economy," Mr Paulson said.
"We regret having to take these actions. Today's actions are not what we ever wanted to do - but today's actions are what we must do to restore confidence to our financial system." Mr Paulson added: "Government owning a stake in any private US company is objectionable to most Americans - me included.
"Yet the alternative of leaving businesses and consumers without access to financing is totally unacceptable.
"When financing isn't available, consumers and businesses shrink their spending, which leads to businesses cutting jobs and even closing up shop."
US President George W Bush said the effort is needed to boost confidence and avert a severe downturn.
"These measures are not intended to take over the free market, but to preserve it," the US President said in brief remarks in the White House Rose Garden.
This Business news fetched from AFP..
This Business news fetched from AFP..
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According to news agency PTI , recent figures of the Directorate General of Commercial Intelligence and Statistics show that India's exports increased by 29.02% y/y to USD 162.9bn during fiscal year 2007-08 (April to March), exceeding the official target of USD 160bn.
http://tradingideas.in/blog.htm
According to news agency PTI , recent figures of the Directorate General of Commercial Intelligence and Statistics show that India's exports increased by 29.02% y/y to USD 162.9bn during fiscal year 2007-08 (April to March), exceeding the official target of USD 160bn.
Trading Ideas
http://tradingideas.in/blog.htm
According to news agency PTI , recent figures of the Directorate General of Commercial Intelligence and Statistics show that India's exports increased by 29.02% y/y to USD 162.9bn during fiscal year 2007-08 (April to March), exceeding the official target of USD 160bn.
Trading Ideas
http://tradingideas.in/blog.htm