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Big U.S. banks selling stock to repay government

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posted on May, 11 2009 @ 01:50 PM
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NEW YORK (Reuters) - Three big U.S. banks on Monday said they would sell $5.55 billion of common stock and repay funds from the government's bank bailout program, after federal stress tests showed they can weather a deep recession without new capital.

U.S. Bancorp plans to sell $2.5 billion of stock, and is also selling $1 billion of debt. Capital One Financial Corp sold $1.55 billion of stock, while BB&T Corp said it will sell $1.5 billion.

BB&T also cut its quarterly dividend 68 percent to 15 cents per share to save $725 million a year, after 37 straight years of higher payouts. Chief Executive Kelly King in an interview said the decision marks "the worst day in my 37-year career."

Separately, KeyCorp said it would sell $750 million of stock to help plug what regulators called a $1.8 billion capital shortfall. KeyCorp said it may take other actions, including converting other securities to common stock.

www.reuters.com...

The government is now ordering those banks which are the strongest to sell more common stock, repay their debt, or sell their debt.

I am not really savy in this issue, but as the article says

Regulators last week ordered 10 lenders, including Wells Fargo and Morgan Stanley, to raise a combined $74.6 billion.


To me it is starting to sound as if they want to have these banks which are the strongest sell more to whoever has the capital, even though I understand in part it is part of Capitalism, wouldn't this make these banks less stable?

Can anyone savy on this explain what this really means? because the way i see it this is like making these stronger banks more propense to going bankrupt.




posted on May, 11 2009 @ 02:29 PM
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Thanks for posting about this issue....

While I cannot help answer your questions, I am clueless as well and wondering what this all means!

It kinda sounds big, though... with all going on, surrounding those banks already.



posted on May, 11 2009 @ 02:35 PM
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It's just billion dollar money laundering.
Pay out a few hundred billion in bailouts, get 75 billion back, then earmark it as income and spend it on pork for the politicians.
It's a kickback on a disturbing scale.
Hidden in plain sight.

By the way, why keep a bank strong and solvent? Why not just print more dollar debasing fiat money and do the whole thing again when they fail?

They got away with it already. Of course they are going to do it again.



posted on May, 11 2009 @ 02:43 PM
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They need to do this before the wave of credit card defaults hit them in their arses.

See the banks stress test were worst than the government let out, they already cut their right outs but the credit card ones are not taken into consideration yet.

They key factor to understand how bad the banks are is their inability to raise capital without government intervention.

Another key factor to show how bad the economy is doing is the way that the government also ignore the unemployment figures.

While the government keeps putting tax payer money on banks, money that is not even collected yet the nations unemployment keeps raising.

Banks financial problems has not even been fixed with all the billions already squandered on them.

So now the government is at the end of the rope, while the nations deficit is already bigger than the one Bush accumulated over 8 years.

Wake up people our nation is in deep caca and sinking everyday.



posted on May, 11 2009 @ 04:04 PM
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reply to post by marg6043
 



Actually the banks are not having that much trouble raising capital.

May 8 (Bloomberg) -- Bank of America Corp. and Morgan Stanley sold $7 billion of debt without a federal guarantee today, as U.S. banks take advantage of a rally in credit markets to repay government bailout funds.

Morgan Stanley raised $4 billion in the largest sale this year of dollar-denominated bank debt without U.S. backing, according to data compiled by Bloomberg. Bank of America of Charlotte, North Carolina, issued $3 billion of non-guaranteed five-year notes. They join lenders including Goldman Sachs Group Inc., which sold $2 billion of notes on April 29 in its second offering this year without government backing.

Bank of America Sells Notes Without FDIC Guarantee

So where is all this trouble you are talking about. Hell these bonds are not even insured!!!!!!



posted on May, 11 2009 @ 04:12 PM
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Originally posted by LostNemesis
Thanks for posting about this issue....

While I cannot help answer your questions, I am clueless as well and wondering what this all means!

It kinda sounds big, though... with all going on, surrounding those banks already.


In a nut shell you let the public purchase stock (instead of private stock which is usually private to keep a large firm from buying 51 percent of your stocks and becoming the majority share holder causing you to lose control of what goes on with what was once your company).

So it means we joe public can buy stocks from them now which increases the money coming in and then uses that money from the newly purchased stock to pay off the govt.

Problem with that is well.... It's not exactly legal but the govt. in this case is making it a legal ponze scheme. Now maybe I'm wrong on this and if I am anyone is more than welcome to correct me sense I'm just guesstamating on this one. But it's what I got out of the article.



posted on May, 11 2009 @ 06:15 PM
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reply to post by Darthorious
 


Companies issue more stock all the time to pay off debts, purchase other assests, etc. There is nothing illegal about it. Nobody has to buy the stock they are issuing. There is one problem for people who own the shares in that stock already... It causing dilution in the stock price.



posted on May, 11 2009 @ 06:16 PM
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reply to post by tide88
 


And history repeat itself,

Stock Pullbacks Then and Now: Is History About to Repeat Itself?

Can I say desperation with capital letters,


With stocks jumping 35 percent in less than two months, you can't help but ask the question: Is history repeating itself?

AP
Crowds panic in the Wall Street district of Manhattan due to the heavy trading on the stock market in New York City on Oct. 24, 1929.
--------------------------------------------------------------------------------

Investors who want the stock market to go up had better hope not.

The market's moves after the 1929 market crash serve as a scary template that investors hope the current market won't follow.

At that time, stocks plunged about 48 percent in just two months following the Oct. 29 crash, only to surge 48 percent in the next six months.

But the next two years saw a crushing drop in the Dow Jones industrial average—which at that time was trading off a Sept. 3, 1929 high of 381.17—that saw the index lose 86 percent from the high of the rally.

So could the same thing happen again?


www.cnbc.com...






[edit on 11-5-2009 by marg6043]



posted on May, 11 2009 @ 06:27 PM
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If we weren't allowed to know exactly where all the bailout money went, to whom or how much, and there's no oversight then how do we know the banks are really paying back all that they were given?

We don't, jokes on Joe Tax Payer once again



posted on May, 11 2009 @ 06:58 PM
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Originally posted by ElectricUniverse


NEW YORK (Reuters) - Three big U.S. banks on Monday said they would sell $5.55 billion of common stock and repay funds from the government's bank bailout program, after federal stress tests showed they can weather a deep recession without new capital.

U.S. Bancorp plans to sell $2.5 billion of stock, and is also selling $1 billion of debt.
Capital One Financial Corp sold $1.55 billion of stock, while
BB&T Corp said it will sell $1.5 billion.



Regulators last week ordered 10 lenders, including Wells Fargo and Morgan Stanley, to raise a combined $74.6 billion.






just Diversions...

trying to make the 'requirements' of the 'Stress Test' seem appropriate.
the Stress Test is supposted to be forward looking enought that the banks
would have adequate enough cash to sustain mortgage losses & such when the unemployment rate goes to 8.9%....
trouble is... unemployment is Already at 8.9% Now,
not in some 6-9 month future window.

The banks (some of the super 19 banks) have more than +$100Billions
in derivatives that might well become due in the next quarter...-that's why they were required to come up with that $76.4 Billions extra.

keep in mind that these 'Stress Test' requirements for more working capital are generally for the next Quarter not the whole next Fiscal Year... so every Quarter, like a Chinese-Water-Torture, the Fed/Treas will tell the banks to dig deeper from their till.
==Of course, the bankers 'Till' gets periodically filled up with money from bail-outs/TARP funds/TALF that is Gratis from the Taxpayers...

Consider that the banks, et al... have picked the taxpayers pockets for over $13 Trillion already, and they still need to generate more capital to stave off bankruptcy, illiquidity, capitalization, & solvency Issues


the complexities of issuing more corporation stock gets too convoluted to explain anything..
just recall.. the Fed/Treas has guaranteed that NONE of the 'blessed' 19 banks will fail
& the gov't will even eat the loss of the 10% dividend payments the gov't would collect on the Perferred Share it once held but has since been converted into non-paying common shares.


TEA party anyone
(sorry for the edits there)

[edit on 11-5-2009 by St Udio]



posted on May, 11 2009 @ 09:09 PM
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reply to post by St Udio
 


And on top of that already another bailout is going to be hitting the nation on June.

Interesting how the government keeps funneling money to keep the nation alive.

New Fed Bailout Program to Launch in June

www.abovetopsecret.com...



posted on May, 11 2009 @ 11:32 PM
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Originally posted by ElectricUniverse


NEW YORK (Reuters) - Three big U.S. banks on Monday said they would sell $5.55 billion of common stock and repay funds from the government's bank bailout program, after federal stress tests showed they can weather a deep recession without new capital.



The other word was that the biggest bank of them all needed some fix:


By Karey Wutkowski and Jonathan Stempel Karey Wutkowski And Jonathan Stempel – Wed May 6, 7:07 am ET

WASHINGTON/NEW YORK (Reuters) – Bank of America Corp has been deemed to need as much as $34 billion in additional capital, according to the results of a government stress test, a source familiar with the results told Reuters late on Tuesday.



By the time it was finally announced, there was little suspense: the 19 major banks subjected to the federal government's "stress test" got a passing grade. Federal Reserve Chairman Ben Bernanke, in announcing the results, said all the banks are solvent and should resume lending.

So what is really the truth?

The truth is that no one knows what the truth is.


[edit on 5/11/2009 by stander]



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