It seems many of the Wall Street banks that just received an infusion of capital from Hank Paulson, aren’t using that money to save themselves but to fund acquisitions and takeovers. (That John Mack is such a trend setter!)
While it sort of seems like the banks are behaving a bit recklessly with their gift from Uncle Sam (that’s not what that money was supposed to be used for), apparently that’s what the Treasury wants them to do.
Well, at least maybe now some of these deals held up by the credit crisis will get done, but Wall Street better hope it doesn’t end up needing that money to save itself, because it probably won’t get anymore. Oh, who are we kidding? The Fed will just print up another hundred billion.
FT: The US government’s planned $125bn capital injection into nine financial groups is set to unleash another wave of consolidation as banks scramble to use the cash on takeovers and bolt-on acquisitions, according to Wall Street executives.
Senior bankers say that some institutions, such as JPMorgan Chase, Citigroup and Morgan Stanley, are looking to deploy part of the government funds to plug strategic holes by acquiring rivals, assets or people.
How much does it cost to buy an investment banker these days? Are traders less expensive?
Others, like Goldman Sachs, Wells Fargo and Bank of America are expected not to enter the takeover fray immediately and use the cash infusion to increase their lending capacity and bolster their balance sheets instead.
The moves are likely to be welcomed by the US Treasury, which has been urging institutions to use the funds to break the standstill in credit markets and prevent further bank failures by buying weaker rivals.
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