Treasury makes first bailout payment

Treasury makes first bailout payment
In the first use of the $700B rescue fund, the Treasury bought $125B worth of stock in nine major financial institutions.
WASHINGTON (AP) -- The Treasury Department has made the first payments from the $700 billion rescue fund, a total of $125 billion in stock purchases from nine major financial institutions.
Treasury officials on Wednesday released a report on the payments, showing that the $125 billion in purchases of bank stock were made on Tuesday. The program is designed to inject fresh capital into the nation's banks as a way to encourage them to resume more normal lending.
The report showed that the payments included $25 billion each to Citigroup Inc. (C, Fortune 500), JPMorgan Chase & Co. (JPM, Fortune 500) and Wells Fargo & Co. (WFC, Fortune 500) Bank of America Corp. (BAC, Fortune 500) received $15 billion andMerrill Lynch & Co. (MER, Fortune 500), which is being acquired by Bank of America, got $10 billion. Bank of New York Mellon (BK, Fortune 500) received $3 billion and State Street Corp. (STT, Fortune 500) of Boston got $2 billion.
Two large investment banks, which converted to bank holding companies during the upheavals on Wall Street last month, also got support. Goldman Sachs Group Inc. (GS, Fortune 500) and Morgan Stanley (MS, Fortune 500) also received $10 billion each.
The nine major banks were called to a meeting with Treasury Secretary Henry Paulson on Oct. 13 where he convinced them to participate in the program even though some of the institutions argued that they did not need the money being supplied by the government.
Paulson wanted major banks to be unified in participation as a way to remove any stigma from the program. The government has begun striking deals with major regional banks, and the goal is to have another $125 billion distributed to potentially thousands of banks by the end of this year, all in an effort to bolster the banks' reserves so they will increase their lending.
On Tuesday, Treasury officials informed representatives of non-publicly traded banks, a group that covers about 6,000 of the nation's 8,500 banks, that they will also be able to participate in the program. Officials said they were moving to modify the contracts so that institutions without publicly traded stock would be able to submit applications.
The government also is being petitioned by a number of other industries, from auto companies to insurance firms, in a bid to get a part of the $700 billion bailout package.
The announcement Wednesday represented the government's first acknowledgment of the names of the banks and the amounts of money they were receiving, although the institutions had separately disclosed that information after their meeting with Paulson.
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