A post by Pat
Why is it necessary to limit free speech about the government’s intervention to save the free market? The U.S. Treasury has “asked†banks not to divulge details of the Fed’s stock purchase plan.
The original intent of the bailout package was to purchase debt. Secretary Paulson says he never had any intention to intervene in markets but alas, soon after the bailout package was passed, he realized this was necessary. The Emergency Economic Stabilization Act of 2008 was promoted as a plan for the government to purchase “toxic assetsâ€, i.e., mortgages and mortgage securities, but as usual the government left an opening by including ambiguous language. In this case, “any other financial instrumentâ€.
The Treasury Department recently announced it is purchasing $250 billion of bank stock. Some of the nation’s largest banks were pressured to sell stock to the government. Paulson claims he wants healthy institutions participating to remove any stigma imputed to a bank getting a bailout. The U.S. Treasury now has an ownership interest in nine major banks and will also own stock in hundreds of small banks across the country.
The government is under no legislative obligation to ever sell the stock. Banks have an opportunity to offer a buyback, but the government doesn’t have to take it. It is entirely at the discretion of the Secretary of the Treasury.
We are assured the Treasury Department is required to protect the taxpayers’ best interest. So why are the banks muzzled? According to Bank of New York Mellon spokesman Kevin Heine:
…:the government has asked us–and I think they’ve asked the other banks–not to describe their program.
“In other words, it’s fine for us to say what we think of the participation in the program, but when people call here about details related to the program itself, the Treasury Department has asked that we defer those questions back to them because they don’t want the banks describing to the press or to the external world their program.â€
“Normally that probably wouldn’t be the case, but because it’s the U.S. government, you know, the U.S. government tells you not to talk about their program, you basically don’t talk about their program.â€
Is it in he taxpayers’ best interest to hear a one-sided explanation from the government about its intervention in bank ownership? This is from the Bush administration. Imagine how far an Obama “share the wealth†administration would take it?
I’m an ordinary person who doesn’t have a clue about most of the standard Excel financial formulas. I just have a gut feeling if we aren’t being bamboozled already, we surely will be. Today is another horrible day on Wall St. Additional “rescue†packages are being discussed. I fear the economic crisis will prove to be the cover story of preference for unlimited big government control of the economy surpassing the wildest dreams of the global warming gang.
I’m no wiz on the economy but I’m smart enough to know that an Obama administration is NOT good for it.
I agree with you, Pat. We think this is bad? An Obama administration will be 100 times this.