November 14th was the deadline for firms to apply for the rescue funds offered by the government. The US Treasury was flooded with applications on Friday even as firms rushed in last minute to apply.
Though only thrifts and banks were supposed to benefit from the $250 billion program of capital purchase by the treasury, hope of cash injections were high among finance companies, insurance companies and others.
Even private banks which had enough time to apply put in their applications anyway on Friday due to fear of being left out. According to Financial Services Roundtable senior vice president Scott Talbott, there is a very high interest level from businesses. There was skepticism however among the members of the American Bankers Association regarding the purpose of this program which was announced on October 14th and they wrote to the Treasury twice asking them for further clarifications before they could decide on participating in the scheme. Treasury was also requested by the bankers to push the deadline further to give them more time to reflect and decide on the options. According to Wayne Abernathy, the ABA executive, skepticism in the industry about this program has however faded with over 40% of the industry showing an interest.
According to this program, the Treasury will identify banks which qualify and buy from them preferred shares. The banks in return must impose certain restrictions on payment of dividends and adhere to certain caps on executive pay.In a bid to qualify for the capital purchase programs, a lot of firms were involved in an effort to acquire thrift or bank charters.
