Friday, October 10, 2008

US govt. might buy stake in several banks

It seems that the U.S. government/treasury is getting ready to buy an ownership stake in a broad array of American banks. This seems to be for the first time since the last great depression .
According to the treasury secretary, this "program would be designed to encourage the raising of new private capital to complement public capital". But it seems that they only wants to buy nonvoting shares . It seems that a broad intervention might represent a vote of no-confidence in the entire banking industry and not just some troubled institutions. Hopefully at least some strings regarding compensation of top executives could be attached to the buy , but I very much doubt if that will happen.
Earlier, Britain had also started a sort of partial nationalization of its troubled banks by allowing them cash in exchange for stakes in the banks.

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