- Prison Planet.com - http://www.prisonplanet.com -

Backdoor Nationalization? U.S. May Convert Banks’ Bailouts to Equity Share

Posted By admin On April 20, 2009 @ 10:29 am In Money Watch | Comments Disabled

EDMUND L. ANDREWS
NY Times [1]
Monday, April 20, 2009

WASHINGTON — President Obama’s top economic advisers have determined that they can shore up the nation’s banking system without having to ask Congress for more money any time soon, according to administration officials.

In a significant shift, White House and Treasury Department officials now say they can stretch what is left of the $700 billion financial bailout fund further than they had expected a few months ago, simply by converting the government’s existing loans to the nation’s 19 biggest banks into common stock.

Converting those loans to common shares would turn the federal aid into available capital for a bank — and give the government a large ownership stake in return.

While the option appears to be a quick and easy way to avoid a confrontation with Congressional leaders wary of putting more money into the banks, some critics would consider it a back door to nationalization, since the government could become the largest shareholder in several banks.

Backdoor Nationalization? U.S. May Convert Banks’ Bailouts to Equity Share obama 340x169 [2]

The Treasury has already negotiated this kind of conversion with Citigroup and has said it would consider doing the same with other banks, as needed. But now the administration seems convinced that this maneuver can be used to make up for any shortfall in capital that the big banks confront in the near term.

Each conversion of this type would force the administration to decide how to handle its considerable voting rights on a bank’s board.

Full article here [1]


Article printed from Prison Planet.com: http://www.prisonplanet.com

URL to article: http://www.prisonplanet.com/backdoor-nationalization-us-may-convert-banks%e2%80%99-bailouts-to-equity-share.html

URLs in this post:

[1] NY Times : http://www.washingtonpost.com/wp-dyn/content/article/2009/04/19/AR2009041902276.html?hpid=moreheadlines&sub=AR

[2] Image: http://www.prisonplanet.tv/subscribe.html

[3] The Biggest Bank Robbery In History? More Quantitative Easing = Backdoor Bailouts: http://www.prisonplanet.com/the-biggest-bank-robbery-in-history-more-quantitative-easing-backdoor-bailouts-for-the-big-banks-without-having-to-go-through-congress.html

[4] The Giant Banks Are ALREADY State-Sponsored … So Why Not Create Public Banks to at Least Share the Gains, Help Out Main Street, and Grow Our Local Economies?: http://www.prisonplanet.com/the-giant-banks-are-already-state-sponsored-so-why-not-create-public-banks-to-at-least-share-the-gains-help-out-main-street-and-grow-our-local-economies.html

[5] US to inject $125bln into major banks this week: Treasury: http://www.prisonplanet.com/us-to-inject-125bln-into-major-banks-this-week-treasury.html

[6] Trillions In Secret Fed Bailouts For Global Corporations And Foreign Banks: http://www.prisonplanet.com/trillions-in-secret-fed-bailouts-for-global-corporations-and-foreign-banks-%e2%80%93-has-the-federal-reserve-become-a-completely-unaccountable-global-bailout-machine.html

[7] Bailouts Went To Foreign Banks: Congressional Report Confirms What We Already Knew: http://www.prisonplanet.com/bailouts-went-to-foreign-banks-congressional-report-confirms-what-we-already-knew.html

Copyright © 2013 PrisonPlanet.com. All rights reserved.