If you own bank stocks, you may not be told by that bank if the US Treasury decides that the bank was unworthy or “too troubled” to receive government cash. That’s right, you heard us, the bank not deemed solvent enough to receive bailout cash may not have to inform its shareholders of that fact.
According to an article by Deborah Solomon and David Enrich in today’s Wall Street Journal, the federal government’s $250 billion plan to bolster US financial institutions may “foster further consolidation in the industry.” Some banks have already announced that they intend to use bailout monies to help make acquisitions.
But that is the subject of a different blog post, perhaps. What is troubling to this author is the revelation by the Treasury on Monday of this week that it will not make public the names of banks that are rejected by the Treasury but instead will only announce the names of those that qualify for assistance.
“Government officials are wrestling with whether banks will need to inform shareholders that they have been rejected by the government.” Excuse me?! Someone please tell us how anyone can deem as immaterial the fact that the Treasury Department has decided not to gamble taxpayer bailout cash on your financial institution.