Government Steals More Money from Private Sector

This is remarkable:

Banks could go to the private sector for the extra capital to support additional lending. But the government’s expeditious approach to shutting down troubled banks and recapitalizing the survivors may be discouraging private investment — the ultimate goal for a recovery in the industry.

Last April private equity shop TPG and other major firms plowed $7 billion into troubled lender Washington Mutual. Five months later their stake was wiped out when regulators seized WaMu and sold it to JPMorgan Chase.

At the same time, it’s hard for private investors to match the government’s generous terms. The Treasury requires banks that accept its money to pay Uncle Sam only a 5 percent annual dividend. [Emphasis added.]

Wow.

Speak Your Mind

*