Bailout Bungled; ETF Investor Trust Is Lost

The U.S. Treasury is gearing up to deliver capital injections to 20 more banks, large and small, which could encourage financial exchange traded funds (ETFs) to move in the right direction.

The Treasury has allocated $250 billion for purchasing stakes in U.S. banks, and $125 billion has been approved for nine big banks. More than 50 regional banks have offered stakes to the Treasury and are awaiting the final decision, report Rebecca Christie and John Brinsley for Bloomberg.

Which banks will get money? That’s still a mystery, as the Treasury won’t discuss it until it completes a capital injection in them. Institutions are free to disclose their own preliminary approval, however.

Treasury Secretary Henry Paulson said today that recapitalizing banks is the most effective use of the $700 billion bailout fund, says Mark Felsenthal for Reuters. He did acknowledge that the reputation of the United States has been tarnished and that we have humiliated ourselves as a nation.

Boy, isn’t that the truth. Investors have lost trust in their financial system, and people all over the country are hurting. Meanwhile, as the government looks for a solution, they’ve bungled it, and it makes you wonder where you can go or who you can look to for reassurance.

KBW Regional Banks (KRE) is down 17.2% year-to-date.

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