$250 billion injection to the major US banks by Zuzana Zelenakova

The Bush administration has decided to make another major strategic move and pour about $250 billion directly into the top nine banks in the country. This is expected to encourage the banks to lend to one another again. The market immediately soared hoping that this is the right remedy to the financial catastrophe that brought to their knees both giant financial institutions and small investors alike. "The history of banking crises suggests very strongly that you need heavy government involvement. Half measures don't work," said Nariman Behravesh, chief economist at forecasting firm Global Insight. "This is a good thing. It's about time." The similar steps were taken also in Europe where banks are reluctant to lend to each other for the fear of losses. European governments overcoming their differences put together on Monday $2,3 trillion to save the banking system. Six countries that use the euro – Germany, France, the Netherlands, Spain, Portugal, Austria – and Britain helped to soothe the stock market by their pledges. “The action we are taking today is unprecedented but essential to all of us,” said British Prime Minister Gordon Brown. “We must in an uncertain and unstable world be the rock of stability upon which people can depend.” Now back to the situation in the United States. Another rescue money package will be injected into nine major banks and financial firms. Although the government officials did not give the names of the nine banks news reports are talking about Bank of America, Wells Fargo, Citigroup, JPMorgan Chase, Morgan Stanley and Goldman Sachs. In return the government will receive nonvoting shares of their stock. However, there are concerns that banks not included and also their customers could get quite angry about this. Such a stepped up government intervention worked well in Europe but it may not be so in the US, said Edwin Truman from Peterson Institute for International Economics.


related story: http://us.lrd.yahoo.com/_ylt=AmfexvzBz3vM.ZiA7k4XG76s0NUE/SIG=12fh5ehi6/**http://cosmos.bcst.yahoo.com/up/ynews?ch=4226720&cl=10181119&lang=en

by Zuzana Zelenakova for PocketNews (http://pocketnews.tv)

PocketNews is a new real-time news broadcaster delivering the latest and hottest news right to your pocket ! With global clients who want to be kept up to date, PocketNews is everyone's way of keeping in touch with the World.

These news are original content from young talents around the world and are selected for you by Chris Cantell.

edited by Beata Biskova