Bailout Recapitalization Program: Will It Be Boom Or Bust?
Bank Lawyer’s Blog:
It’s funny how your perspective changes, depending on whether you’re on the inside looking out or on the outside looking in.
Today, Secretary of the Treasury Henry Paulson claimed that banks from all sides were beating down his door to get some of that good, old recapitalization mojo working for them.
Banks of all sizes are interested in a piece of the federal
government’s $250 billion fund to recapitalize financial institutions,
Treasury Secretary Henry Paulson said Monday.
“We have received indications of interest from a broad group of banks of all sizes,” he said at a briefing in Washington.
[...]
Banks must apply for funds by Nov. 14, Paulson said. They must consult with their primary federal regulator before applying.
Better hurry, banks of all sizes! Get the capital while it lasts! Don’t be the bank on your street corner not to be the beneficiary of the bailout!
Strangely, we found evidence that not all banks were salivating over the ability to sell preferred stock and warrants to the Feds, even at the “low, low rate” of only 5 per cent per annum.
Banks, however, may not rush to sign up for the infusion, said Sean
Ryan, analyst with Sterne Agee. Executives may be concerned about the
stigma and about letting the government into their affairs, though the
government stake does not have voting power.
That certainly seemed to be the case in a couple of stories in the business press today. From Colorado came word, via the state banking commissioner, among others, that banks there weren’t a mile high with glee over the opportunity, although some were taking a “wait and see” attitude.
“I would have to assume that we won’t see as many local banks taking
advantage of it, but that’s just speculation,” said Jennifer Saltzman,
vice president of the Colorado Bankers Association,
several hours after…