The news from Fed and Treasury only signal the situation is already out of control

$700B bailout isn’t even enough to stablize the financial sector now Treasury wants to fund outside of financial sector as well, this is just getting worse, situation is already out of control, this news will definitely send DOW to hell today.

TREASURY TO OFFER FURTHER FUNDS TO BANKS, CONSIDER CAPITALIZATIONS OUTSIDE FINANCE SECTOR

WASHINGTON (MarketWatch) — The White House has shelved plans to purchase troubled mortgage assets from banks and other financial institutions, Treasury Secretary Henry Paulson said Wednesday. That program was once the cornerstone of the $700 billion rescue plan for financial markets passed by Congress. But almost as soon as Treasury received the money, it decided that giving capital to banks in return for preferred stock is a better use of the funds. Some of the money saved from not buying mortgage assets will now be used to shore-up the market for credit card receivables, auto loans and student loans, Paulson said. This market has ground to a halt, he added. Treasury would also consider giving some capital to non-bank financial institutions. Proposals to modify mortgages remain on the table, Paulson said. The cost of these programs will be substantial. Paulson’s remarks came in a lengthy update of the government rescue plan. He defended the steps taken to date, and there are signs of improvements in markets. But in the next breath, he said the financial system remains fragile and the focus must be recovery and repair.

========================

The Fed’s tone is getting bold, the next time you hear Fed speak about this issue, A ‘force’ law may be made for banks to satisfy the economic needs. “You don’t lend, I won’t bail you out.” This is the deal. We can realize something more from the news, The Fed is making two totally contradictory remarks. Banks must increase lending, and must make certain they lend to qualified borrowers. In other words, lend more money to alot less borrowers. This money is to keep banks from failing at an alarming rate, it is not for lending! But of course they can’t tell us that directly.

Fed to banks: Go forth and lend

“The agencies expect all banking organizations to fulfill their fundamental role in the economy as intermediaries of credit to businesses, consumers, and other creditworthy borrowers,” said the Fed, the Federal Deposit Insurance Corp., the Comptroller of Currency and Office of Thrift Supervision.

========================

The U.S. Government thinks it can solve problems by printing and spending more of our money in the market place. It buys equity positions in big companies because no one else will. It then spends more and more money in those companies to keep them solvent. It discriminates between those companies that survive and go bankrupt. Why AIG but not Lehman Brothers? Why GM but not Toyota North America and Honda of America? Which is the next industry that can not be allowed to fail? Is there any end in sight to this madness? Please stop the insanity!

House Speaker Pelosi seeking auto maker bailout: report

SAN FRANCISCO (MarketWatch) — House Speaker Nancy Pelosi will seek legislation to rescue the auto industry in the post-election session of Congress, The Associated Press reported Tuesday, citing Democratic aides. The AP said Pelosi is not expected to specify how large a bailout is needed.

Related Posts:

• Paying down everything, screw the financial institutions!
• Anyone who believes the people in charge are telling the TRUTH read this:
• Soros: ‘Bad Bank’ for Troubled Assets Is Bad Idea
• Treasury: Monitoring bank bailout funds “difficult”
• GM and Chrysler are less than 19 days away from bankruptcy

Leave a comment