Bankruptcy

British Take Over Banks, US Considers Purchases of Preferred Shares

By J. Michael McBride

We know A.) that this economic melt-down is a world wide problem and B.) over the weekend, there were meetings amongst the G7 to have a coordinated “attack “ on the problems. However, different countries are taking different steps to address the problem. In the US, the bailout bill is morphing into an investment bill whereby the US government will purchase shares in healthy banks. ( see, http://apnews.myway.com/article/20081012/D93P5CD80.html ) In the UK, the government is trying outright purchases of controlling interests in banks.

“The Chancellor will move to take control of the Royal Bank of Scotland today by injecting £20 billion of taxpayers’ money.

The Government is also expected to take over HBOS in the most dramatic extension of state ownership in the British economy since the war….

The Chancellor will also offer government guarantees on interbank lending, a key part of the financial system that has virtually dried up. The scale of the nationalisations dwarfs the rescues of Northern Rock and Bradford & Bingley and represents a potentially huge risk for the taxpayer. In return, the Government will insist on putting its own representatives on the banks’ boards and require them to reopen lending to small businesses and restrain bonus payments….Ministers denied last night that there was any plan to nationalise the whole banking sector and said that the aim was to restore the banks to full private ownership as soon as was sensible.”

Here is a link to that article:
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4932250.ece

Michael

Full post as published by Texas Lawyer Blog on October 13, 2008 (boomark / email).