The recent bailout of Wall Street has begun to trickle down to Main Street as the Fed wants to “share the wealth” of the bailout with Main Street banks. The offer of preferred shares at a 5% dividend rate is essentially “free money” in the capital asset pricing model and which Main Street Bank wants to turn down “free money?” Part of the Fed’s plan with this money is for larger banks to use it to buy out about 1,000 banks from the pool of 7,203 commercial banks in existence as of June 30, 2008 in the USA, down from 12,343 banks in 1990. Many of the 1,000 banks that are to be acquired will come from rural communities, where the local bank is often the only bank in town.
By Jack Schultz
Full Story: http://www.boomtowninstitute.com/Newsletters/20081118.html