News Release 2008-121 | October 14, 2008
Comptroller of the Currency Issues Statement on U.S. Banking Plan
WASHINGTON — Comptroller of the Currency John C. Dugan issued the following statement regarding plans to strengthen the U.S. banking and financial system.
The combination of actions announced today by the U.S. government – a guarantee of bank credit, extension of federal deposit insurance to all bank transaction accounts, and the willingness to invest in the stock of all banking organizations – sends a strong message to consumers, businesses, and the entire financial system that the U.S. government supports U.S. banks. In addition, nine large banking organizations, including the four largest national banks, agreed to participate in the stock purchase program by selling $125 billion of preferred stock to the Treasury. This will raise their already strong capital ratios to levels that far exceed regulatory capital requirements, sending an equally strong message that these banks are well prepared for adverse economic conditions in the future. They also set a strong example for other well capitalized U.S. banks – both large and small – to tap this new source of capital as needed so that credit can once again flow freely to creditworthy borrowers.
That, of course, is the fundamental purpose of all these bold measures: to bolster confidence in banks, so that consumers and businesses remain secure in providing funds to them, and to bolster confidence of banks, so that they will use these funds to make prudent loans to others. In these extraordinary circumstances, the Office of the Comptroller of the Currency strongly supports these extraordinary measures so that banks can return to their fundamental role of providing the credit that businesses and consumers need to grow and prosper.
Robert M. Garsson