From Deseret News archives:
U.S. takes plunge into banking business
Radical plan to ease financial crisis inspires hope, skepticism
Some early signs were hopeful for the latest in a flurry of radical efforts to save the nation's financial system: Credit was a bit easier to come by. And stocks were down but not alarmingly so after Monday's stratospheric leap.
The new plan, President Bush declared, is "not intended to take over the free market but to preserve it."
It's all about cash and confidence and persuading banks to lend money more freely again. Those are all critical ingredients to getting financial markets to function more normally and reviving the economy.
The big question: Will it work?
There was a mix of hope and skepticism on that front. Unprecedented steps recently taken including hefty interest rate reductions by the Federal Reserve and other major central banks in a coordinated assault just last week have failed to break through the credit clog and the panicky mind-set gripping investors on Wall Street and around the globe.
The Dow Jones industrials declined 77 points on Tuesday after piling up their biggest point gain ever on Monday on news of Europe's rescue plan and in anticipation of the United States' new measures.
In return, the government will get ownership stakes in the financial institutions. Banks, meanwhile, will have to accept limitations on executives' compensation.
"Government owning a stake in any private U.S. company is objectionable to most Americans me included," Treasury Secretary Henry Paulson said in announcing the initiative. "Yet the alternative of leaving businesses and consumers without access to financing is totally unacceptable."
Whether the $250 billion will be sufficient to encourage banks to lend again is hard to tell, said Anil Kashyap, professor of economics and finance at the University of Chicago's Graduate School of Business. The Treasury Department arrived at the $250 billion figure after consulting with banking regulators.
"This plan will work if we wind up with everybody pretty well capitalized," Kashyap said. "But if it doesn't reach that point, we'll be back in soup down the road."
Recent comments
Nevermind, I'll go to some other news website for news of the day.
How's the Dow doing today? | Oct. 15, 2008 at 9:16 a.m.
- RSL will play for MLS Cup tonight 3:06 a.m.
- Jazz outlast Pistons in overtime 3:06 a.m.
- Utah Utes whip SDSU 3:05 a.m.
- BYU records with win 3:05 a.m.
- RSL dancing with soccer stars 3:04 a.m.
- Cougars turn focus to dreaded rivals 3:04 a.m.
- Dixie State campus briefs 3:03 a.m.
- Weber State campus briefs 3:02 a.m.
- UVU campus briefs 3:01 a.m.
- BYU campus briefs 2:59 a.m.
- Glenn Beck to enter politics?
- BYU records with win
- Police link alcohol to murder
- Can BYU throw vs. Air Force?
- Huntsman blasts media over trip
- Christian leaders not backing down
- Cougars cruise to victory in Hawaii
- Memo out again tonight for Jazz
- Religion cited in deportation fight
- Nephi's steel bow difficult to replicate
- Buttars wants to limit gay rights laws
192 - Palin plans tour stop in Utah
173 - Glenn Beck to enter politics?
129 - Palin's book shows she's unqualified
122 - Officer cleared in Cardall Taser case
103 - BYU cuts Women's Research Inst.
100 - Jazz finally win in San Antonio
98 - BYU records with win
95 - Utes knock off rival Aggies
93 - Huntsman pleased with Obama
87
There's a lot of reason to leave your plastic home as you shop:
I don't pretend to be an expert on global warming. I've met with...
Beck is extremely smart, he is selling books and is very popular on TV. All...
@Mick, the Federal Govt is run by corporations through contributions and...
Lets bond together and hope for a REAL celebration SUnday night, can hardly...
I was on the playground too and some teachers came out and called us all to...
B.Y.U. has been a consistent a top 25 ranked winner under Max Hall. Hall has...
Did Timp win four in a row or 4 in 4 years?
You have a lot of growing up to do, It seems like you have not cxperienced...
The proposed ethics law puts roughly the same burden on a legislator that a...
Hall ACTUALLY broke the all timme wins record vs WYO last week. I guess...
Sounds to me like Kraig Powell may be a candidate for resignation. So long,...

