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US to unveil $250bn Europe-style banking bail-out, recomended by US Nobel Prize winner Krugman
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by SOLARLIFE | October 14, 2008 at 12:33 am
522 views | 32 Recommendations | 32 comments
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US to unveil $250bn Europe-style banking bail-out, recomended by US Nobel Prize winner Krugman
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US follows Europe style bank rescue system, recomended by American Nobel Prize Winner Dr. Paul Krugman, columinist New York Times Blog
By James Quinn in New York
The US government to inject $250bn in US banks Photo: Bloomberg
Last Updated: 7:12AM BST 14 Oct 2008At the heart of the plan, which the US Treasury is expected to announce today, will be a move to take stakes in nine leading banks.
The US is also expected to guarantee new debt issued by banks for three years — a measure meant to encourage the banks to resume lending to one another and to customers, the New York Times reports.
The Federal Deposit Insurance Corporation will offer an unlimited guarantee on bank deposits in accounts that do not bear interest — typically those of businesses — bringing the US in line with several European countries, which have adopted such blanket guarantees.
Of the $250bn, which will come from the $700bn bailout approved by Congress, half is to be injected into nine big banks, including Citigroup, Bank of America, Wells Fargo, Goldman Sachs and JPMorgan Chase, officials told the New York Times. The other half is to go to smaller banks and thrifts.
The investments will be in preferred stocks so that the government can benefit from a rebound in the banks’ fortunes. At the banks that receive the state help, executive compensation will be restricted.
According to the New York Times Bank of America, Citigroup, JP Morgan Chase and Well Fargo will receive $25bn each. Investment banks Goldman Sachs and Morgan Stanley $10bn and Bank of New York and State Street around $2bn-$3bn each.
The strategy is in part very similar to that enacted by the British government, although no American banks are likely to be nationalised as a result.
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Most RecentMost Recommended Comments (32)
at 00:57 on October 14th, 2008
SOLARLIFE, I like this story. It's good stuff.
at 01:11 on October 14th, 2008
Dave, thanks for Flag, link: Nobel price winner Krugman, READ NYT blog: Worthwhile British Initiative
at 01:02 on October 14th, 2008
SOLARLIFE, I like this story. It's good stuff.
I hope everything works out well.
Mary
at 01:24 on October 14th, 2008
duo..I hope everything works out well. Well this is not easy. Now come the others the companies, car industry, and say give us handouts, no money for innovation in environment for middle class in sight, just the dinosaurs kept alive. But they eat up every tree already:
German Car Industry hit by US-GM cancer, asking for state money handouts
at 01:48 on October 14th, 2008
Science fiction movies always depressed me a little, because some of the futuristic events portrayed seemed too possible. You know the movies I mean? Those where there was no electric power and people lived under marshal law. Some of those movies showed the earth was perpetually cold and dark, usually due to some nuclear disaster that had occurred a hundred years before. Many folks were deformed because of birth defects resulting from radiation, and everyone was very hungry all of the time.
Although it is disturbing to see so much of our resources go to bailing out Big Business, I think it is best for legislators to do whatever they need to do to keep things as normal as possible. If they let the businesses fail, what then? There will be thousands more people without jobs. Where would it end?
I don't really know much about finance and government, so I usually keep it to a Good Stuff when commenting about such matters. But I do want the legislators to know that we are counting on them to do the right thing, using all of their wisdom and applying their highest moral judgment to try and fix things for everyone's sake.
Thanks for the article. It is informative.
Mary
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Dave Keatingat 01:40 on October 14th, 2008
It's really so interesting how the US is following Europe's lead toward nationalization in this instance. Could this be a new era for global capitalism?
at 01:52 on October 14th, 2008
Seems like it's Revelations time, alright.
Mary
at 02:06 on October 14th, 2008
duo...revelation time, good point, think of millions excluded, and a healthy environment as "VIDA-economy" motor. (vida=life)
at 01:56 on October 14th, 2008
Dave...Could this be a new era for global capitalism? If we get the curve to channel the money into the innovative SME's small-medium enterprises with fast environment growth potential, we could make it. Gordon Browns plan (before crash) was to inject $ 250bn in the fast growing environment industry. In the UK start-ups get the respect they need. Even some californian high tech solar companies came to the UK for the perspective of midterm financing. Energy projects need 5 years, no way with us-style 2 years return of investment by developing and producing in china. America has to come back to finance small production in the US, like the UK does. That we have a crisis, everybody struggling like hell, should make us fit to struggle on, to see the light at the end of the tunnel: The new middle class economy with some sort of responsible investment capitalism, as you predicted Dave. thanks for comment. Not to forget all the french paris based business man flying daily London for real business. Good luck to find the new economy faster than expected. Crisis always gives a fast track in the future, if we are capable to face our fears, give up past security and jump start in the Unknown future. Forget yesterday, join tomorrow, accept risk.
at 02:36 on October 14th, 2008
SOLARLIFE, I like this story. It's good stuff.
what would have been the nobel result , in case there were no crisis, who is going to get benifited by the bail out most,?
at 06:18 on October 14th, 2008
Amitjha...in case there were no crisis, noble result ? Well you are right the $ 1 trillion bailout today around the planet is paid by the people with distributed world inflation; The bankers with their electronic "frog jump in the jar" did not contribute with one Dollar. They take now the electonic benefits of the injected money and leave us with what ? Global debt.
at 02:49 on October 14th, 2008
SOLARLIFE, I like this story. It's good stuff.
at 06:19 on October 14th, 2008
rahul say something for Brazil, how is the Real doing ? Thanks for Flag
at 03:13 on October 14th, 2008
SOLARLIFE, I like this story. It's good stuff.
at 06:21 on October 14th, 2008
Rhonda thanks for Flag "Europe style US bailout"
at 05:04 on October 14th, 2008
The White House is now the largest venture capitalist in the world; it's business above politics, as usual. I just can't figure out why Goldman Sachs - who gives hugely insane bonusses and boast of paying an office secretary a salary almost equal to that of a head nurse, should benefit from all these "bailout" schemes. In the end, how do you really explain the excesses of the American society in terms of the poverty of Third world countries?
at 12:20 on October 14th, 2008
asterix611..povery of third world. Roller coster ride ends red DOW closed 3111 - 77 points
$ 1 trillion worldwide bailout cashed in by No-nations Investors, paid with inflation poverty.
at 05:06 on October 14th, 2008
SOLARLIFE, I like this story. It's good stuff.
at 08:14 on October 14th, 2008
at 05:50 on October 14th, 2008
SOLARLIFE, I like this story. It's good stuff.
I say it is highway robbery, a major railroading slam job by the elite..They have taken money from the US taxpyer. Literally have have gotten away with free money to use as they wish in the Financial System. How can they get away with that? They should be paying the American people interest on that money they have hijacked through Congress. These terrorists need to be stopped. They should be indicted and taken to court...to stop this grandstanding of lies. Instead they are making the American people pay the money back with added interest. Where are our lawyers to stop these SOB's?
http://my.nowpublic.com/world/700-illion-bust-indict-and-take-them-court-robbery
Rev. Jermano
at 12:23 on October 14th, 2008
djermano...These terrorists need to be stopped. They should be indicted and taken to court.. Up to now, nobody in prison criminal bank bancruptcy out of law reach ?
at 09:27 on October 14th, 2008
Pres Bush did announce this this morning. It's working, as the DOW is up for a second day. Up 40 cents a minute ago. Yay!
at 12:35 on October 14th, 2008
How can taxpayers, now the shareholders of the banks, cash in daily on Wallstreet and make money by speculating on negative results of the Old Investment bankers ? No online service of government open how to cash in on taxmoney. What a oneway world.
at 13:08 on October 14th, 2008
Anybody can incorporate and go public. That is the route to success. The Government won't allow the Corporation to fail. All you need is a server and a decal in the window. Server can be leased. Window can be rented.
at 13:16 on October 14th, 2008
Fairbanks..US capitalist state owner of Banks, Taxpayer Wall street cash back entrepreneur, is this normal ?
at 13:22 on October 14th, 2008
As normal as everything else we do.
at 13:39 on October 14th, 2008
Fairbanks, I got it, we go into the Unkown.....
at 14:11 on October 14th, 2008
Excuse me, please. I will delete this question momentarily.
But, has NowPublic been down for maintenance within the last 20 minutes, as far as anyone knows?
I tried to enter NowPublic and got a screen saying it was down for maintenance, and I wondered if that is true, or was it a message ONLY I got?
I entered NowPublic another way - other than the browser - through one of my articles.
And it looks like everything is flowing along normally on NowPublic -- It does not look like you are Down For Maintenance.
Please answer to my email and let me know. I just posted this article, and I wondered:
After publishing American Family Under Siege for Inquiring About Brother Who Died in Govt. Custody, Now Public suddenly went down for maintenance on my computer screen.http://my.nowpublic.com/world/amercan-family-under-seige-inquiring-about-brother-who-died-govt-custody
Thanks.
Mary
at 14:21 on October 14th, 2008
Hi Mary,
Yes, the site went down briefly when our database server was temporarily overloaded. It is fine now and I'm sorry for the inconvenience. It was deliberate on our part at all.
If you see any other issues, just let me know.
at 14:33 on October 14th, 2008
duo that happened to me too. Template maintainance comes obviously with a set of 6 Trojans, one is a keypad reading Trojan slowing down every action. I will try to upload the Template to your article (have to search for it), have a look to it, if it is the same, then you can delete it. Pls adress editors under Contact us (when i had the template contact us was not working too)