Treasury Secretary Henry Paulson said today that government purchases of stock in major banks, including several with operations in Connecticut, represent an investment that should eventually make money for the taxpayer.
Paulson said the government will own shares in the banks that should be paid back with a reasonable return and the government will also receive warrants for common shares in the banks, among them Bank of America, JPMorgan Chase & Co., and WellsFargo, which is acquiring Wachovia Corp.
Bank of America, JPMorgan Chase and Wachovia have banking operations in Connecticut.
“This is an investment, not an expenditure, and there is no reason to expect this program will cost taxpayers anything,” Paulson said at a Treasury briefing on the program. “This program is designed to attract broad participation by healthy institutions and to do so in a way that attracts private capital to them as well.”
Paulson said program’s goal is to increase investors’ confidence in banks and to boost the confidence of the banks, too, so they will “deploy, not hoard, their capital.”
He made his comments as he announced a streamlined application process for banks to apply to sell shares to the government by a deadline of Nov. 14. (AP)
