Paulson Slipped Banks Quiet $140B Tax Break

Veterans of S&L bailouts in catbird seat in current crisis

(NEWSER) - For a tight-knit group of former top government officials, the current financial crisis is a golden opportunity. Veterans of the savings and loan bailout of the 1990s, these operatives, now mostly lawyers and bank advisers, are doing a brisk business telling clients how to profit from the meltdown, the New York Times reports. “It is a good time to be me,” said one lawyer who helped found the Resolution Trust Corporation. More»

Institutions fear market will judge them harshly for not tapping into $700B pot

(NEWSER) - Investor and public pressure could prompt up to 1800 more financial institutions, both publicly and privately held, to apply for a share of the $700 billion bailout fund, the Wall Street Journal reports. The cash-grab likely stems from fear that failing to do so would make an institution look like it wasn’t savvy enough to take advantage of the potential windfall or healthy enough to qualify. More»

(NEWSER) - The Treasury Department may take part ownership of many US banks in a bid to encourage lending and shore up confidence, the New York Times reports. Under the proposal, Treasury would give banks cash in exchange for ownership stakes. In theory, that would improve balance sheets and help banks lend to one another and to consumers. The danger is that it could feed the notion of failing banks, or punitive action, and further alarm shareholders. More»

Higher deposit insurance would bring money in, help thaw credit markets

(NEWSER) - Congress should stop fighting over the Paulson bailout, writes BusinessWeek economist Michael Mandel, and approve an expansion of FDIC deposit insurance to $1 million. It should also triple deposit insurance reserves to $145 billion. It would solve the immediate problem, calming the hysteria in the market, and attract funds to banks, he argues, and give Congress time to decide whether banks, and the housing market, still need federal support. More»

With no federal deal, agencies limited to ad hoc solutions

(NEWSER) - With yesterday’s failure of the $700 billion bailout, the Fed and Treasury are reconsidering their options, the New York Times reports. Fearful of cutting interest rates, they're back to rescuing struggling institutions on a case by case basis, and printing money—offering $150 billion in emergency loans to banks and $330 billion to foreign central banks yesterday. More»