Government has allocated $162 billion to buy stakes in 208 institutions The Treasury Department said Wednesday that it is challenging for government officials to understand how financial institutions participating in the $700 billion bank bailout program are using the capital they receive. "Each individual financial institution's circumstances are different, making comparisons challenging at best, and it is difficult to track where individual dollars flow through an organization," Treasury wrote to the oversight panel mandated by Congress. In a letter, Neel Kashkari, the department's interim secretary for financial stability, defended his use of roughly $350 billion in bank bailout funds authorized by Congress. So far, Treasury has used a significant amount of those assets to buy minority stakes in large and small financial institutions as part of its Capital Purchase Plan. However, Treasury has been under pressure from lawmakers to account for how those institutions have used the capital. According to the letter, Treasury has allocated $162 billion to buy stakes in 208 financial institutions. http://www.treas.gov/press/releases/reports/123108 cop response.pdf http://www.marketwatch.com/news/sto...x?guid={2DFA5366-C3EB-4403-9056-B6F02A04BA9C} Great news ! Ha, ha, ha...
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If you were a bank, and you were given, say, $30 billion to do with as you pleased... Would you bid 3 times the market value of crappy mortgage back securities? Would you continue to make risky loans to keep the economy going? Would you just sideline the cash to shore up your balance sheet so you can stay in business... and then sit and try to wait the storm out?
"Difficult" does not equal "Impossible". Wow - who knew that being Treasury Sec would be a tough job. Maybe too difficult for Paulson? They are still worried about getting margin calls (which these well-run financial institutions have been getting these days), so why use the money?
this is advance finance and economics the treasury department is doing by providing 'liquidity' into the financial markets temporarily. they aren't really spending any money as they are investing in assets that can be sold a profit in the future. right now, the entire financial system is low on liquidity. these lawmakers are layman and think they are giving money when they are investing in the companies.