Will the US Nationalise its Banks to save its economy?
13/05/2012 
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Is the US Congress planning to Nationalise its Banks? Its looking a lot like socialism [some say communism] to many on the republican side of US politics, but deregulation and lax practices and auditing have left many US and European banks without liquidity, and that’s the big problem that isn’t going away according to Mr Mortgage.
US Treasury Secretary Henry Paulson is weighing plans for the US government to invest in banks as the next step in trying to resolve the deepening credit crisis.
These capital injections are something that Secretary Paulson is actively considering,
White House Press Secretary Dana Perino said in a briefing in Washington. She also said President George W. Bush will meet with Group of Seven finance ministers at the White House on October 11.
Paulson told reporters in Washington on Wednesday that legislation Congress passed last week to rescue financial institutions gave him broad authority that he intends to use, beyond just buying mortgage-related assets on banks’ balance sheets. He indicated that an option available may be boosting companies’ capital with cash infusions.
”It is the policy of the federal government to use all resources at its disposal to make our financial system stronger,” Paulson said. ”We will use all of the tools we’ve been given to maximum effectiveness, including strengthening the capitalization of financial institutions of every size.”
Banks worldwide aren’t raising enough capital to offset losses: while posting $US592 billion of write-downs and losses during the crisis, they have added just $US442.5 billion of new capital.
The International Monetary Fund anticipates losses will more than double to $US1.4 trillion.
You may recall my earlier post that warned that the bailout package was too small to be effective, and too late. A cynic would say that Bush and Paulson have held off as long as they could hoping to be able to pass the buck to someone else, and in doing so have made the problem worse that it might otherwise have been. This problem after-all is over 2 years old.
Rick Adlam has been helping clients with home loan finance since 1985 when he was home consultant with AV Jennings. Rick started Equity Home Loans in 1996 to help homeowners become property investors. Rick currently consults in the development of Mr Mortgage for mortgage brokers and HomeMate for new home buyers.
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