Waiting until the end of October made no sense at all. Do it now and stop the bleeding, or at least lessen it. Buy preferred positions in the banks so when the economy settles and turns around, taxpayers have something to show for their sacrifice.
In remarks to the media just concluded, Treasury Secretary Hank Paulson said the federal government will use the authority it has been granted by the $700 billion Wall Street bailout/rescue law to buy actual stakes in U.S. banks, in addition to merely buying troubled assets off their books.
The move is notable because it will give the federal government and, by extension, U.S. taxpayers, an actual ownership position in banks, effectively nationalizing them to a degree.
Under the original bailout/rescue plan, taxpayers would be only temporary owners of the troubled assets, which will be sold back into the private sector. And, indeed, the newly announced ownership stake may be temporary, as well.
"We can use taxpayer money more effectively, more efficiently, it will go farther, they will get more for their dollars and more protection if we develop a standardized program" for buying equity stakes, Paulson said.
Paulson was asked if Treasury will spend more money buying the troubled assets or buying equity stakes.
"I'm not willing to say anything today relative to the size of the two efforts," he said.
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