Senior Research Fellow Richard Ebeling was featured in an OpEd in the Salt Lake City Deseret News:

The federal government has decided to use $250 billion of the $700 billion financial-sector bailout package to buy equity shares in many of America's largest financial institutions, partially nationalizing the banking industry.

Treasury Secretary Henry Paulson says buying shares in companies like Citigroup, Bank of America, JP Morgan Chase, Goldman Sachs, Morgan Stanley and Wells Fargo is necessary in order to inject liquidity and confidence in the world financial markets.

The Treasury Department, Paulson says, will buy up to $25 billion in preferred, nonvoting shares of each of the targeted companies. The shares will pay annual dividends of 5 percent for the first five years and 9 percent after that.

The rationale for Washington doing this is that it will calm the markets, allow banks to resume lending, and address the public relations problem arising from the public's dislike of the government's plan to take bad mortgages off these companies' hands at taxpayer expense — without guaranteeing whether and at what price they will be resold back into the market.

Read the full article