52% of bailout to banks being paid in dividends to shareholders

This needs to be eliminated immediately. It’s unacceptable to let banks pay shareholders dividends while they are being propped up on life support via taxpayer money. The “Treasury” people (hmmm, who could that be?) who are allowing this are trying the old spin, that if banks are unable to hand out dividends they would not participate in the plan to bail them out. Ummm, huh? Let’s review, yet again, who is in control here. It’s not the banks, it is the US government. Why is there so much fear about having a come to Jesus with the banks?

Critics, including economists and members of Congress, question why banks should get government money if they already have enough money to pay dividends — or conversely, why banks that need government money are still spending so much on dividends.

“The whole purpose of the program is to increase lending and inject capital into Main Street. If the money is used for dividends, it defeats the purpose of the program,” said Sen. Charles E. Schumer (D-N.Y.), who has called for the government to require a suspension of dividend payments.

The Treasury plans to invest up to $250 billion in a wide swath of U.S. banks in return for ownership stakes, which the government will relinquish when it is repaid.

Among other restrictions, participating institutions cannot increase dividend payments without government permission. They also are barred from repurchasing stock, which increases the value of outstanding shares.

The 33 banks signed up so far plan to pay shareholders about $7 billion this quarter. Companies generally try to pay consistent dividends and, at the present pace, those dividends will consume 52 percent of the Treasury’s investment over the initial three-year term.

Wow. 52% of the bailout for dividends. What was Paulson thinking?

An American in Paris, France. BA in History & Political Science from Ohio State. Provided consulting services to US software startups, launching new business overseas that have both IPO’d and sold to well-known global software companies. Currently launching a new cloud-based startup. Full bio here.

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