Word: banke
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...banks want money, most of it will have to be loaned into the financial system. The Bank of England will further buttress the credit system by buying corporate loans and commercial paper...
...Most economists believe that the Achilles Heel of the current U.S. bank rescue plan is that it gets money into banks, but the capital does not come out the other end in the form of loans to businesses and individuals. Businesses cannot conduct their affairs in the normal course. The average citizen cannot get a home loan or expand his access to credit, even through it is his taxes present and future, which are the source of the bank bailout capital...
...Over the last several days, the incoming administration has moved toward the idea of creating one federal agency which would have the purpose of taking most of the toxic assets off bank balance sheets. Since the figure at Citi is probably at least as large as the $300 billion pool that the government is guaranteeing, the combination of bad paper from Bank of America, Wells Fargo (WFC), JPMorgan (JPM), and the next tier of large US banks is almost certainly close to $1 trillion...
...passed tens of billions of dollars of loans to banks and brokerages through its emergency lending window. It has lowered interest rates to zero. Treasury has put $25 billion into each of the money center banks. It is now backing over $300 billion in bad assets held by Citigroup (C) through a loss-sharing agreement. Bank of America (BAC) is getting a similar deal. The programs to back bad assets is almost certainly going to spread. (See pictures of TIME's Wall Street covers...
...sponging up of all these toxic assets takes the discussion back around to what the government gets in return for such colossal aid. The largest American banks had market capitalizations of as much as $300 billion each two years ago. The purchase of bad assets when stock values were at those levels would have kept shareholder dilution at a reasonable level. The government would have gotten shares for taking the junk off bank books and putting it into its new "bad bank" agency...