Treasury Bails Out Banks
November 12, 2008
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Want to buy a car? Pay your tuition? Start your own business? Well, to do all of these things, you probably need some kind of loan. Obtaining a loan these days is difficult. However, things might be looking up in the future.
On Oct. 27, weeks after the $700 billion financial bailout plan was announced, the government stated they would start rescuing banks. Money from the bailout plan will be invested in buying bank stocks. The bank plan is to create greater lending security. A third of the $700 billion bailout money will assist in saving U.S banks. “The government will begin doling out $125 billion to nine major banks this week as part of its effort to contain a growing financial crisis,” said a Treasury official.
In addition to buying bank assets, larger banks will start buying out smaller banks. “PNC Financial Services Group…[will be] acquiring National City Corp. It was the first instance of a bank using resources it has been told it will receive from the government’s stock purchase program to support an acquisition of another bank,” said the official.
The banking plan is another idea in hopes to save the current ailing economy. The consolidation of the banking system will increase functionality in U.S. banks by supplying money for loans. The Treasury’s rescue plan will affect nine major banks in the United States. Implementation of the rescue plan is expected by the end of this year or early 2009.