President Bush revealed plans to use a portion of the Congress approved $700 billion bailout plan to invest into the banking system through capital infusions. Nine of the nation’s largest banks have already agreed to take the capital and in return will give preferred shares to taxpayers and limit executive pay. It is widely expected that half of the requested $250 billion will go to those nine banks. In exchange, the government will receive an annual dividend of between 5-9%.
Those banks will be:
• Goldman Sachs (GS)
• Morgan Stanley (MS)
• JPMorgan Chase (JPM)
• Citigroup (C)
• Wells Fargo (WFC)
• Merrill Lynch (MER)
• Bank of New York (BK)
• State Street (STT)
• Bank of America (BAC)
President Bush commented, “This is an essential short-term measure to assure the viability of American’s banking system. These measures are not intended to take over the free market, but to preserve it.” After Bush’s announcement, Paulson, Federal Reserve Chairman Ben Bernanke and FDIC Chairman Sheila Bair appeared together to endorse the plan.
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