Right Again.
Remember how I spent the last few weeks saying the Paulson Plan to hand over $700,000,000,000.00, either as a lump sum or in installments, to bail out the banks and investment houses that sank the economy was a bad idea? And that it wasn’t going to work?
And remember that link to This American Life I posted just the other day, which explained the difference between the Paulson Plan and “stock injections”?
Guess who may have been proven right?
The Treasury plan was still preliminary and it was unclear how the process would work, but it appeared that it would be voluntary for banks.
The proposal resembles one announced on Wednesday in Britain. Under that plan, the British government would offer banks like the Royal Bank of Scotland, Barclays and HSBC Holdings up to $87 billion to shore up their capital in exchange for preference shares. It also would provide a guarantee of about $430 billion to help banks refinance debt.
The American recapitalization plan, officials say, has emerged as one of the most favored new options being discussed in Washington and on Wall Street. The appeal is that it would directly address the worries that banks have about lending to one another and to other customers.
