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“Private Equity Placement”: The $700bn bailout agreed by Congress will not be used for its original purpose.
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“Private Equity Placement”: The $700bn bailout agreed by Congress will not be used for its original purpose.
“Private Equity Placement”are thought to believe that US Treasury Secretary, Hank Paulson’s admission that the purchase of illiquid assets on bank balance sheets was not an effective use for the $700bn package provides evidence that the US government is unsure of how to alleviate the effects of the financial crisis on America.
“Private Equity Placement” sources cited Mr. Paulson’s decision to use a significant portion of the money to purchase stock in several key banks in a bid to shore up their capital ratios.
One of the “Private Equity Placement” sources suggested that the news may have an adverse effect on stock prices because the suddenness of the Treasury’s change of direction may lead to a loss of confidence in its ability to ease credit market tightness.
The Treasury’s decision to purchase stock in the banks emulated the UK’s bailout plan which was hailed as a shrewd move.
“Private Equity Placement” apparently believe that the US government will eventually be forced to guarantee the liabilities of every systemically important bank and financial institution at a cost of trillions of dollars.
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