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Long Overdue Capital Injection

Posted By Barry Ritholtz On October 14, 2008 @ 7:28 am In Bailouts,Credit,Federal Reserve,Taxes and Policy | Comments Disabled

Bank_capital_inj [1]

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Here we are, more than one year into the credit crisis, and long after the collapse of Bear Stearns, and a month after Lehman Brothers, AIG, WAMU, Fannie/Freddie, Wachovia, etc. and we are getting a capital injection into the key banks.

As we noted yesterday, Paulson (and to a lesser degree, Bernanke) were way behind the curve in recognizing the Housing, Economy and Credit issues.

Although Paulson was against the capital injection, the Fed chair was not. the As Krugman noted [2] yesterday, "this was also the solution privately favored by Ben Bernanke."

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Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben S. Bernanke and FDIC Chairman Sheila Bair are scheduled for a press conference at 8:30 am . . .

14bailoutgraphic [3]

graphic courtesy of NYT [3]

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Sources:
Joint statement by Federal Reserve, U.S. Department of the Treasury, and Federal Deposit Insurance Corporation (FDIC) [4]
http://www.federalreserve.gov/newsevents/press/monetary/20081014a.htm

President’s Working Group Market Stability Initiative Announcement [5]
http://www.federalreserve.gov/newsevents/speech/bernanke20081014a.htm

Treasury Said to Invest $125 Billion in U.S. Banks [6] 
Robert Schmidt and Peter Cook
Bloomberg, Oct. 14 2008
http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=addCa.BISYDU

U.S. Investing $250 Billion in Banks [7]
MARK LANDLER
NYT,  October 13, 2008
http://www.nytimes.com/2008/10/14/business/economy/14treasury.html   

Gordon Does Good [8]
PAUL KRUGMAN
NYT, October 12, 2008   
http://www.nytimes.com/2008/10/13/opinion/13krugman.html

Bank Bailouts to Make Recession `More Manageable,’ Volcker Says [9]
Chen Shiyin
Bloomberg, Oct. 14 2008
http://www.bloomberg.com/apps/news?pid=20601087&sid=aCKGXbTNfSVI&

U.S. to Buy Stakes in Nation’s Largest Banks [10]   
DEBORAH SOLOMON, DAMIAN PALETTA, JON HILSENRATH and AARON LUCCHETTI   
WSJ, OCTOBER 14, 2008
http://online.wsj.com/article/SB122390023840728367.html

Intervention Is Bold, but Has a Basis in History [11] 
STEVE LOHR 
NYT,October 13, 2008   
http://www.nytimes.com/2008/10/14/business/economy/14nationalize.html


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2008/10/long-overdue-capital-injection/

URLs in this post:

[1] Image: http://www.marketwatch.com/news/story/global-efforts-rescue-banking-system/story.aspx?guid={9C59F5E0-73C7-4AC8-93CD-88E01998974E}

[2] Krugman noted: http://www.nytimes.com/2008/10/13/opinion/13krugman.html

[3] Image: http://www.nytimes.com/2008/10/15/business/economy/15bailout.html

[4] Joint statement by Federal Reserve, U.S. Department of the Treasury, and Federal Deposit Insurance Corporation (FDIC): http://www.federalreserve.gov/newsevents/press/monetary/20081014a.htm

[5] President’s Working Group Market Stability Initiative Announcement: http://www.ritholtz.com/blog http://www.federalreserve.gov/newsevents/speech/bernanke20081014a.htm

[6] Treasury Said to Invest $125 Billion in U.S. Banks: http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=addCa.BISYDU

[7] U.S. Investing $250 Billion in Banks: http://www.nytimes.com/2008/10/14/business/economy/14treasury.html

[8] Gordon Does Good: http://www.ritholtz.com/blog http://www.nytimes.com/2008/10/13/opinion/13krugman.html

[9] Bank Bailouts to Make Recession `More Manageable,’ Volcker Says: http://www.ritholtz.com/blog http://www.bloomberg.com/apps/news?pid=20601087&sid=aCKGXbTNfSVI&

[10] U.S. to Buy Stakes in Nation’s Largest Banks: http://www.ritholtz.com/blog http://online.wsj.com/article/SB122390023840728367.html

[11] Intervention Is Bold, but Has a Basis in History: http://www.ritholtz.com/blog http://www.nytimes.com/2008/10/14/business/economy/14nationalize.html

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