Emergency Economic Stabilization Act. Failed?
First, the $ 700 billion rescue for the economy was about buying devalued mortgage-backed securities from tottering banks to unclog frozen credit markets.
Then it was about using $ 250 billion of it to buy stakes in banks. The idea was that banks would use the money to start making loans again.
But reports surfaced that bankers instead use the money to buy other banks, pay dividends, give employees a raise and executives a bonus, or just sit on it. Insurance companies now want a piece; maybe automakers, too, even though Congress has approved $ 25 billion in low-interest loans for them.
Treasury hired the Bank of New York Mellon Corp. as “custodian” of the troubled assets purchase program. The bank will conduct “reverse auctions” to buy the toxic securities on behalf of the Treasury. The lower the price they set, the better chance sellers have of getting rid of the devalued securities.
On the same day it hired Mellon, the Treasury also picked the company to receive a $ 3 billion investment as part of the capital-infusion program. The same bank hired to help manage part of the economic rescue plan became a beneficiary of it.
Sure enough, a day after Dodd, D-Conn., made the comment, the government confirmed that PNC Financial Services Group Inc. was approved to receive $ 7.7 billion in return for company stock. At the same time, PNC said it was acquiring National City Corp. for $ 5.58 billion. rather than free up money for the loans it was supposed to make under the terms of their contract…
So has the the 700 billion dollar bailout turned into the worlds most expensive joke?