WASHINGTON — The chief executives of the nine largest banks in the United States trooped into a gilded conference room at the Treasury Department at 3 p.m. Monday. To their astonishment, they were each handed a one-page document that said they agreed to sell shares to the government, then Treasury Secretary Henry M. Paulson Jr. said they must sign it before they left. (NY Times)Some of the CEO's protested stating that their bank was not in trouble and did not need a bailout. But by 6:30, all nine chief executives had signed. This sets in motion the largest government intervention in the American banking system since the Depression and is not in accordance with the rescue plan Mr. Paulson himself had successfully fought to get through Congress only two weeks earlier. Mr. Paulson even admits that this move is "objectionable and we regret having to take these actions." Somehow I doubt that. I feel that this may have been the plan all along because it sure sounds as if these CEO's were forced to sign the agreement regardless of the necessity.
All told, the potential cost to the government of the latest bailout package comes to $2.25 trillion, triple the size of the original $700 billion rescue package, which centered on buying distressed assets from banks. The latest show of government firepower is an abrupt about-face for Mr. Paulson, who just days earlier was discouraging the idea of capital injections for banks. (NY Times)The concern here is whether or not banks are being targeted due to size and investment opportunity. Not all the institutions on its list are in a unhealthy position. He is punishing some institutions for the irresponsible actions of others and reassuring the "too big to fail" idea. I do not think I am the only one who is scared by this. I'm scared for the future because once the government sets a precedent they continue to take and take, extending their powers even further with follow-up legislation. And in this case the taxpayers have absolutely no say.