Monday, October 13, 2008

Government to back MUFG investment in Morgan Stanley

We now have an FDIC fund for those that invest in our banks! I suppose you have to do that. This Fed, and our Government, gave the Mom and Pop cheer to all those that invested in Fannie and Freddie preferreds, and this Fed also gave the tacit guarantee that Lehman was too big to fail.

So now they are backstopping foreign governments that invest in our banks.

Finally, our Fed is all in:

The deal is considered a crucial step in the government’s strategy for revitalizing the financial system by luring outside investment while it considers buying stock in banks directly. The transaction’s failure would deal a blow to that effort and potentially unnerve the financial markets.

The Treasury’s assurances amount to another extraordinary move by the government and could serve as a model for future deals. The tense, weekend talks were so critical to the financial markets that they drew in both the Treasury and the Japanese government.

Mitsubishi and the Japanese government pressed the Treasury Department over the weekend to guarantee that if the United States were to inject money into Morgan Stanley at a later time — a step the Treasury has ruled out for now — the move would not wipe out Mitsubishi’s investment.

No comments: