Where is the U.S. government getting the money to buy shares in the countrys financial firms?
The $250-billion will be part of the $700-billion set aside to help bail out the financial sector. That bigger pot of money, authorized by the U.S. Congress, is likely to be borrowed from the public, corporations and perhaps other national governments, by issuing bonds and Treasury bills. Of the $250-billion, about half will be used to buy preferred shares and common stock warrants from several of the country’s largest banks. Those banks have also agreed to place some limits on executive pay, including a ban on “golden parachutes” during the period that the government holds its stake. The other half will go to thousands of small and mid-sized banks. The U.S. government will earn an annual dividend of 5 per cent for the first five years and 9 per cent after that. But Washington’s holdings will be non-voting. The banks will be able to buy back the shares from the government when volatility has cooled down and they can raise capital from private investors. President George Bush also said
