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Will the US government take ownership stakes in major banks by end of 2008?
With the recent bailout package, the US Government has taken ownership stakes in a number of banks, by investing gov't funds in exchange for shares of non-voting stocks, which does represent an ownership stake.
From this source: http://www.buffalonews.com/145/story/508916.html
"To date, 53 banks have received $161.5 billion, with at least 25 more being approved for $6 billion more. Hundreds of others applied by the Nov. 14 deadline.
Under the voluntary program, participating banks sell newly issued, non-voting senior preferred shares to the U. S. Treasury in exchange for an amount of capital equal to at least 1 percent of a bank’s “risk-weighted” assets and no more than 3 percent of those assets. The shares pay an initial annual dividend of 5 percent for the first 5 years, and then 9 percent, giving banks an incentive to raise more money to buy back the shares from the Treasury quickly. "
Background:
Treasury officials say the just-passed $700 billion bailout bill gives them the authority to inject cash directly into banks that request it. More on the New York Times.
Note: To settle as Yes the government needs to take stakes in at least three healthy banks (i.e. banks they were not in bankruptcy or about to enter bankruptcy).
Settlement details:
To settle as Yes the government needs to take stakes in at least three healthy banks (i.e. banks they were not in bankruptcy or about to enter bankruptcy).
Settled
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Yes |
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No |
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Suspend date: Wed 24th Dec 11:59pm PST (3 weeks to go) Settlement date: last Sunday 5:07pm PST
Initial likelihoods: Yes: 70%
Action history:
nigeleccles 
newswrangler![[Power User]](http://www.hubdub.com/images/icon_superuser.gif "This user is a super user"){kind=icon}
: Flagged by super user: Associated Press announced at 6:45PM EDT that US will take equity stakes in banks.
Suspending pending news links.
newswrangler: Link
<http://www.latimes.com/business/la-fi-paulson11-2008oct11,0,6582286.story>
newswrangler: The U.S. government confirms it will take equity ownership in banks for the first time since the Great Depression.
<http://www.latimes.com/business/la-fi-paulson11-2008oct11,0,6582286.story>
newswrangler: Prediction cutoff 6:45PM EDT 
bayoubear: No banks have been identified so this question should still be open 
cheesenips: Five banks named: http://abcnews.go.com/Politics/Economy/story?id=6028477&page=1 Please settle as Yes. 
keyeshoveden: http://www.businessweek.com/investor/content/nov2008/pi2008113_257253.htm?chan=investing_investing+index+page_top+stories
This article seems to imply that equity (ie ownership stakes) have been taken in nine banks so far and that many more could be affected.
keyeshoveden: Do you think we can settle this now? bayoubear: Suspended while examining settlement issues keyeshoveden: http://www.buffalonews.com/145/story/508916.html
This shows that, I think, 153 US banks have had equity investments. Equity is ownership.
bayoubear: With the recent bailout package, the US Government has taken ownership stakes in a number of banks, by investing gov't funds in exchange for shares of non-voting stocks, which does represent an ownership stake.
From this source: http://www.buffalonews.com/145/story/508916.html
"To date, 53 banks have received $161.5 billion, with at least 25 more being approved for $6 billion more. Hundreds of others applied by the Nov. 14 deadline.
Under the voluntary program, participating banks sell newly issued, non-voting senior preferred shares to the U. S. Treasury in exchange for an amount of capital equal to at least 1 percent of a bank’s “risk-weighted” assets and no more than 3 percent of those assets. The shares pay an initial annual dividend of 5 percent for the first 5 years, and then 9 percent, giving banks an incentive to raise more money to buy back the shares from the Treasury quickly. "
Suspend date: Wed 24th Dec 11:59pm PST (3 weeks to go) Settlement date: last Sunday 5:07pm PST
more info...
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