White House Alludes To New Bank Bailout Proposal – Critics Fear Nationalized Banks

April 20, 2009

US (ChattahBox) – As the country’s economic situation continues to worsen, the White House has announced a new plan that they hope will beef up the amount of equity held by banks. But not everyone is happy with the arrangement.

The plan, as presented by President Obama’s financial and economic advisers, would allow the White House to change all future loans to regular stock, turning it into instant equity that would be held by the banks.

While it can’t be denied this strategy would produce hundreds of billions more then the bailout funds alone, there is fear from many over the possibility of a nationalized banking system, in which the federal government is the main shareholder.

However, Rahm Emanuel, the White House chief of staff, said that it is a great move to secure the failing institutions, in an interview on ‘This Week’.

“We believe we have those resources available in the government as the final backstop to make sure that the 19 are financially viable and effective. If they need capital, we have that capacity.”

So far, Citibank has been offered this deal, and others may follow in the coming months. But it’s a move that could ultimately prove too much for many during an already tumultuous time. Nationalization has long since been a hot button issue on the political docket.

But it is becoming clear that the bailout as it is will never be enough to maintain so many failing companies, and Congress doesn’t seem willing to extend another large funding bill to rescue the many institutions that brought on their own misfortune through greedy and reckless lending practices.


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