Bank stocks increase as government implements $250 billion buy-in

Home » Consumer, Investing, Money, Political, Real Estate

Bank stocks increase as government implements $250 billion buy-in

October 14, 2008 – 9:37 pm – No Comment

Yesterday the government announced it would be taking $250 billion of the bailout plan and buying preferred non-voting stocks in some banks. Nine major lenders agreed to the government’s purchase of the preferred stock. The investments are limited to $25 billion per lender.

Today the stocks of the lenders rose, some by as much as 13% in afternoon trading. However, a lot of the damage is already done. The government’s investment into the banks was to unfreeze the credit market so our economy can grow (people will be able to borrow money again and go back to spending.)

The debt the banks have incurred from bad mortgages and other personal debts has caused problems with lending that will last into next year or beyond.