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So far, $250 billion of the capital has been allocated for government purchases of large minority stakes in large and small commercial and investment banks. The next $100 billion is scheduled for government acquisitions of mortgage-backed securities, the asset that lawmakers and Treasury initially expected the funds would be spent on. But will it go there?
"I was left with impression at beginning of last week that we're moving towards the capital injection idea and further away from MBS purchase," Dodd said. "When we wrote legislation we gave a lot of flexibility to do both." But Treasury Secretary Henry Paulson's point man on the $700 billion, Neel Kashkari, still thinks it will be a multipronged approach that includes MBS purchases. "We agreed with you and worked with you to design that flexibility," Kashkari told lawmakers Thursday. "We moved to the capital injection program because it was a faster way to to put capital in the system. Purchasing [mortgage] assets or buying whole loans is key to attract capital to help finance our system. We are pushing very hard on all fronts." However, even as politicians press Treasury for more mortgage asset purchases, banks are still announcing plans to seek capital injections. Earlier Friday, PNC Financial Services Group Inc. announced plans to raise $7.7 billion from Treasury as part of its $5.2 billion agreement to purchase troubled peer National City Corp. - Ron Orol
Ron Orol is a Washington-based reporter for The Deal and author of Extreme Value Hedging: How Activist Hedge Fund Managers Are Taking on the World. CategoriesComments
From: John Sullivan,
Dear Sirs, Would it not be in JP Morgan and its CEO Jamie Dimon, who has Obama Administration Political Goals to be the next Treasury Sec., interest to improve its battered public image, remove the cause of these various lawsuits and treat its Employees and Shareholders with respect and compensate them with a Fair and Just Buyout of WAMUQ: Washington Mutual Inc.? This highly negative situation is starting to snowball out of JP Morgan's control. I'd advice them to offer Shareholders, of which TPG - Texas Pacific Group is a large holder of Common Shares, a generous Buyout. Mr. Jamie Dimon is never going to be an Obama Administration Treasury Sec. with this massive mistake hanging over his head. Sincerely,
Posted on:
October 26, 2008 11:13 AM
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As the markets continue to struggle, Senate Banking Committee Chairman Christopher Dodd (pictured) and other lawmakers are beginning to question how the Treasury Department is using the $700 billion Congress gave it to stabilize the market. 
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What a way to add confidence to a troubled market