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.
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About: Rick: Rick Adlam has been involved in mortgage finance since 1996 with Equity Home Loans as a Founding Partner. Rick created Mr Mortgage™ in 1999, one of Australia's first online mortgage brokers. As a mortgage introducer Rick specializes in helping his clients get approved for low interest mortgage loans with no ongoing fees and charges, and low doc home loans for the self employed.
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About the Author
Rick Adlam Has Written 139 Articles For Us!
Rick Adlam has been involved in mortgage finance since 1996 with Equity Home Loans as a Founding Partner. Rick created Mr Mortgage™ in 1999, one of Australia's first online mortgage brokers. As a mortgage introducer Rick specializes in helping his clients get approved for low interest mortgage loans with no ongoing fees and charges, and low doc home loans for the self employed.
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