U.S. government to buy stock in 9 struggling banks

President Bush announced Tuesday the government will use $250 billion of the $700 billion from the financial rescue package to buy stock in nine struggling banks. "The program is carefully designed to

News 12 Staff

Oct 14, 2008, 11:31 PM

Updated 5,701 days ago

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U.S. government to buy stock in 9 struggling banks
President Bush announced Tuesday the government will use $250 billion of the $700 billion from the financial rescue package to buy stock in nine struggling banks.
"The program is carefully designed to encourage banks to buy the shares back from the government when the markets stabilize, and they can raise capital from private investors," Bush said.
The administration is stressing, however, this is not an effort to take over the free market, but rather a necessary move needed to preserve it while sending a clear message to the banks that will be getting the cash.
"At a time when events naturally make even the most daring investors? risk adverse, the need of our economy requires that our financial institutions not take this new capital to hoard it, but rather to deploy it," said Treasury Secretary Henry Paulson.
Local lawmakers expressed cautious optimism that it will help keep the roller coaster ride on Wall Street in check.
"I'm pushing to make sure that it doesn't go into the hands of executives, but instead goes to loans, student loans, loans for people buying a car or a home," said Sen. Charles Schumer (D- N.Y.).
News of the decision to bailout some of the country?s largest banking institutions, which spells out their partial nationalization, caused a downturn on Wall Street after Monday's record setting trading day that pushed U.S. stocks up by $1.2 trillion.


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