U.S. to Buy Stakes in Nation’s Largest Banks – WSJ.com
by Tom on October 13, 2008
in Market Musings, banks
The U.S. government is expected to buy stakes in the nation’s top financial institutions as part of a wide-ranging effort to restore confidence to the battered banking system, following similar moves by European governments that sent global stock markets soaring.
As part of its new plan, the government is set to buy preferred equity stakes in Goldman Sachs Group Inc., Morgan Stanley, J.P. Morgan Chase & Co., Bank of America Corp., Merrill Lynch, Citigroup Inc., Wells Fargo & Co., Bank of New York Mellon and State Street, according to people familiar with the matter.
via U.S. to Buy Stakes in Nation’s Largest Banks – WSJ.com
Two things that I expect this to do……
1. It will get credit moving again in the banking and business worlds which is a much needed thing.
2. It will, I expect, spur some mergers that will surprise many of us.
I personally feel a lot better about this than I did about the $700 Billion bailout.
Why?
1. It’s not taking bad loans off their books, it’s merely buying stock in them. That removes the moral hazard element of it.
2. I think it has a more likely chance of actually working.
What do you think?
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