Socialism Bush Style: Feds To Take Stakes In US Banks

Having tried without success to unlock frozen credit markets, the Treasury Department is considering taking ownership stakes in many United States banks to try to restore confidence in the financial system, according to government officials. Treasury officials say the just-passed $700 billion bailout bill gives them the authority to inject cash directly into banks that request it. Such a move would quickly strengthen banks_ balance sheets and, officials hope, persuade them to resume lending. In return, the law gives the Treasury the right to take ownership positions in banks, including healthy ones. All kidding aside, this is a good approach for the Wall Street crisis (though it does not address the homeowner/mortgage crisis that underlies the economic problems). Paul Krugman writes: A tentative cheer: Paulson may have been... [read full story]