No relief for homeowners just the banks. Lied to again.
Treasury 'hopes to drive consolidation' through banks plan
The Treasury Department is looking to use its $250 billion recapitalization package for the US banking sector to not only stabilize the industry, but fundamentally reshape it by "driving consolidation", it has been claimed.
Government officials told the New York Times that the department is looking to direct funds allocated to the country's ailing banks towards institutions willing to buy up rivals wounded by the credit crisis.
They added that the Treasury will gear selection criteria for the rescue program towards banks that need capital for new acquisitions, as it does not want to "prop up" weak institutions.
Since the financial crisis took hold, there has been a flurry of takeovers, with national players like the Bank of America, JP Morgan Chase and Wells Fargo snapping up troubled competitors.
Now the Treasury hopes its injection of capital will help the smaller "super regional" banks to drive another round of takeovers.
Meanwhile, Treasury secretary Henry Paulson said he expects "all participating banks" in the federal program to "continue to strengthen their efforts to help struggling homeowners".
So far, nine banks are involved in the government's recapitalization plan - Citigroup (Nasdaq: PLJC), Goldman Sachs, Merrill Lynch (Nasdaq: LNDU), Morgan Stanley (Nasdaq: MNDX), State Street, JP Morgan Chase, Bank of New York Mellon, Wells Fargo and the Bank of America.
ING secures government 'bailout' package
ING, one of the world's top 20 financial institutions, has become the latest firm to secure a 'bailout' capital boost with a national government after the Dutch state agreed to reinforce its position in a deal worth €10 billion ($13.5 billion).
Under the agreement, ING will issue one billion non-voting Tier-1 securities to the government for €10 apiece. It can buy back some or all of these securities at any time for 150 percent of the issue price.
After three years, the company can also convert any or all of the securities into ordinary shares. If it decides to do this, the government can ask for the securities to be paid back at €10 each.
As part of the agreement, the state will nominate two members to sit on ING's board. The group's remuneration policy will also be reviewed to ensure it is not encouraging short-term risk taking.
The banking group's chief executive officer, Michel Tilmant, said its capital position is in line with business plans and regulatory requirements, but that current market conditions make it "prudent to raise our core capital".
ING has 75 million customers worldwide, with offices in Europe, the United States, Canada, Latin America, Asia and Australia.