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Federal government outlines new initiatives, to strengthen markets and the economy

Posted by 104Inc.com on October 15, 2008

The federal government today outlined new initiatives to strengthen markets and the economy, with a particular focus on ensuring stability in the nation’s major financial institutions. These actions include investing at least $250 billion directly into major banks and expanding federal insurance protection to encourage financial institutions to resume lending to one another.

This money will come from the recently passed Emergency Economic Stabilization Act — legislation that empowers the Treasury to use up to $700 billion to provide greater liquidity in the markets and promote overall financial market stability.

The $250 billion will be invested into the nation’s banks, with about half of that total going to nine major institutions, including Bank of America, JPMorgan Chase and Citigroup. In return, the federal government will receive equity stakes in these companies in the form of preferred shares.

In addition, FDIC coverage will be expanded on all non-interest-bearing deposit accounts (which include all checking accounts, with the exclusion of Interest Checking, Tiered Interest Checking, Business Interest Checking and Analyzed Business Interest Checking) for the next thirty days. Banks may extend this expanded coverage through Dec. 31, 2009 for a fee. This action by the FDIC is expected to benefit small businesses by providing FDIC coverage for accounts through which they manage their day-to-day operations.

To better understand today’s action’s please review the following key messages.

Key messages include:

  • The Treasury is investing in the nation’s largest banks in another, complementary move designed to strengthen the financial markets, increase investor confidence and lessen continued volatility. This move follows a similar one taken in the United Kingdom last week.
  • This action, combined with others in recent weeks, can be expected to help increase liquidity and support greater stability in the markets.
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2 Responses to “Federal government outlines new initiatives, to strengthen markets and the economy”

  1. Nice writing. You are on my RSS reader now so I can read more from you down the road.

    Allen Taylor

  2. […] Go to the author’s original blog: Federal government outlines new initiatives, to strengthen markets … […]

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