Just what we need.......More Regulators messing with the banks..... :roll:
Regulators pledge to shore up financial system
Federal banking regulators to roll out revamped capital injection program Wednesday
Jeannine Aversa, AP Economics Writer
Monday February 23, 2009, 4:04 pm EST
Yahoo! Buzz Print Related:Bank of America Corporation, Citigroup, Inc.
WASHINGTON (AP) -- Federal regulators said Monday they will launch a revamped program to shore up the nation's troubled banks that includes the option of increasing government ownership in financial institutions. The new plans are the Obama administration's latest attempt to bolster the strength of the banking system without nationalizing any institutions, which the White House has said it does not intend to do.
The Treasury Department, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency, Office of Thrift Supervision and the Federal Reserve jointly issued the statement amid growing concern that some of the country's biggest banks may need additional assistance to survive the fallout from the worst financial crisis since the 1930s.
The new program -- a crucial component of President Barack Obama's strategy for handling the $700 billion financial bailout -- would give the government greater flexibility in dealing with troubled banks.
In a new twist, regulators have the option of allowing the government to boost its ownership in banks without having to pour more taxpayer money into them. That would be done through a technical change converting the status of the government's shares in a financial institution.
Citigroup Inc. has approached banking regulators about ways the government could help strengthen the bank, including the stock conversion plan, according to people familiar with the discussions. They spoke on condition of anonymity because they are not authorized to speak on behalf of the government or the company. A Citigroup spokesman declined to comment Monday afternoon.
Still, the regulators suggested keeping banks private is a priority.
"Because our economy functions better when financial institutions are well managed in the private sector, the strong presumption (of the program) is that banks should remain in private hands," the regulators said.
The new federal program, like the old one, will allow the government to continue to inject more taxpayer money, or capital, into a bank, in an effort to ride out the financial storm. Of the first $350 billion in bailout funds, $250 billion was used to provide capital injections to banks, including Citigroup, Bank of America Corp. and others. But the Obama administration has not said how much of the second $350 billion will be used for that purpose.
The regulators on Monday did not name any specific banks or respond to reports that the government was considering increasing its ownership of Citigroup.
The White House just last week downplayed persistent speculation that some banks could be effectively nationalized by the federal government.