Drama Behind a $250 Billion Banking Deal

WASHINGTON — The chief executives of the nine largest banks in the United States trooped into a gilded conference room at the Treasury Department at 3 p.m. Monday. To their astonishment, they were each handed a one-page document that said they agreed to sell shares to the government, then Treasury Secretary Henry M. Paulson Jr. said they must sign it before they left.

The chairman of Wells Fargo, Richard M. Kovacevich, protested strongly that, unlike his New York rivals, his bank was not in trouble because of investments in exotic mortgages, and did not need a bailout... [snip]

Kenneth D. Lewis, the chairman of Bank of America, also pushed back, saying his bank had just raised $10 billion on its own. Later, Mr. Lewis urged his colleagues not to quibble with the plan’s restrictions on executive compensation for the top executives... [snip]

But by 6:30, all nine chief executives had signed — setting in motion the largest government intervention in the American banking system since the Depression - all told, the potential cost to the government of the latest bailout package comes to $2.25 trillion, triple the size of the original $700 billion rescue package...

[saw a piece on this on CNN last night with a financial guest who's certain Paulson's move is patently illegal - he forced banks that didn't need money to accept it, and the compensation restrictions that came with it. This isn't just a massive lurch toward socialism, it's a forced lurch. Think through the implications of the government being able to 'acquire' private companies and decide how much key employees will be paid - while you and I underwrite all risk to the endeavor. Now imagine Obama's "fairness doctrine" driving matters.]

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