Yesterday we learned that this is the call of the Bush administration. Apparently, the $700 billion bailout “allows” this. What the?
Originally in the Washington Post:
The Bush administration is hammering out the final details of a plan that would allow the government to inject cash into banks in exchange for ownership stakes.
It is an effort to shore up confidence in the faltering financial system, according to officials and sources who have been in contact with the Treasury Department.
Senior Treasury officials believe they have the authority to take ownership stakes in banks under the $700 billion rescue package that was passed by Congress and signed into law last week, the sources said. But the administration has yet to work out several critical issues, such as how many banks should be included and when the plan should be put into effect.
Late Thursday, the Wall Street Journal reported that the government is weighing two dramatic steps to repair ailing financial markets: guaranteeing billions of dollars in bank debt and temporarily insuring all U.S. bank deposits.
If the two moves come to fruition they would mark the government’s most extensive intervention yet in the financial system, as officials ponder increasingly far-reaching measures to stem the sprawling crisis, the Journal said.
Nick Gillespie on Reason online:
Look for the semi-socialization of the nation’s financial sector to be George W. Bush’s legacy project over the few remaining weeks (thank God) of his presidency (whatever happened to the political capital he was gonna spend on privatizing Social Security? Guess he lost it in a poker game or a war or something). And somehow, if Bush has his way, maybe we the taxpayers will get big steaming piles of equity in a bunch of dying car makers and airlines too.
