eRollover.com
By Mike Rowan
110 banks have asked for $170B under bailout plan
It is amazing how quickly things can change in the economy. With unprecedented government intervention, banks continue to request more and more money to remain solvent. In addition, Barack Obama revealed a plan on Friday for the government to inject cash and liquidity into General Motors and other Detroit auto makers in exchange for government ownership in the companies.
I realize that the term “Socialism” has been thrown around during the presidential campaign, especially when looking at Obama’s agenda. However, these recent developments have me thinking that we are definitely trending in that direction. After all, the nationalization of companies fits the socialist definition to an absolute “T”
Here is a breakdown of the banks and their recent activity:
At least 110 banks have requested more than $170 billion from the Treasury Department’s rescue fund, and many more are expected to have submitted applications before Friday’s deadline.
The requests would come from the $250 billion the Treasury set aside from the $700 billion fund to purchase stock in banks.
Analysts have estimated that 62 banks have received full or preliminary approval from the Treasury for $173 billion from the Troubled Asset Relief Program. The government said Monday that American International Group Inc. also would receive $40 billion from the program.
That $40 billion, however, won’t come from the $250 billion set aside for the banks.
Another 48 banks have applied for about $6.5 billion, according to the Keefe, Bruyette & Woods report. Several banks that have filed applications said they haven’t yet decided whether to accept any funds.
American General has been a frequent topic in the news recently, however insurance companies are scrambling to remain solvent as well. As a result, four life insurance companies that are seeking regulatory approval to purchase savings and loans in order to become eligible for government funds.
One of those companies, Hartford Financial Services Group Inc., said it would be eligible to receive between $1.1 billion and $3.4 billion if its purchase of Federal Trust Bank is approved. Generally, only banks and savings and loans are eligible for direct investment from the TARP. AIG is the only nonbank company to receive such funds so far.
The total also doesn’t include American Express Co., which said Monday it has restructured as a bank holding company, reportedly to seek up to $3.4 billion in funding.
Publicly-held banks were required to file their applications by Friday. Private banks have been given an extended, though unspecified, deadline.
Nine large banks, including Bank of America Corp., Wells Fargo & Co., Citigroup Inc. and JPMorgan Chase & Co., received $125 billion last month.
The scary thing in my opinion, is where to draw the line when dealing with the government.
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