America's financial power center has shifted from Wall Street to Washington, D.C.

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NEW YORK — America’s financial power center has shifted from Wall Street to Washington, D.C.

Top executives from the nation’s nine biggest financial companies apparently had no option when Treasury Secretary Henry Paulson unveiled a plan to partly nationalize the banking system.

And Tuesday, the CEOs offered no words of confidence about the plan or dispatched any memos to the bankers and traders working for them about how a once freewheeling industry is set to change.

The ownership stakes are expected to bring greater government scrutiny in the effort to stabilize the financial system. Banks have also been forced to accept limits on executive pay, scale back bonuses for senior executives, cut golden-parachute payments and adhere to restrictions placed on raising stock dividends.

But just how much this will change the balance of power in the banking industry is an open question.

The Bush administration’s latest prescription for the ailing financial industry calls for spending $250 billion on equity stakes in banks to stimulate interbank lending and revive the stagnant credit markets.

That’s part of a $700 billion package meant to rescue the financial system, with the majority of the money being spent to buy troubled mortgage-backed investments off banks’ balance sheets.

Some analysts saw the government’s latest intervention as necessary to help restore confidence in the market and stave off a prolonged recession.

“This looks to be a very well targeted bullet fired at the worst of the U.S. financial system,” said Avery Shenfeld, senior economist at CIBC World Markets. “It’s not a cure-all for the U.S. economy; it’s a step toward making the recession milder and shorter rather than deep and protracted.”

Others are worried the plan could impede how big banks do business. It could force bankers to exit Wall Street for unencumbered businesses like hedge funds or private-equity shops, leaving traditional investment banks at a disadvantage.

There is also the question of whether banks that receive government money will go back to their more freewheeling ways. Or whether such banks will have an advantage — or a disadvantage — over those that don’t participate.

The one thing analysts, policymakers and bankers alike seem to agree on is that it will take time to figure out exactly how the plan will change the industry.

“Clearly the intention is to help the financial system, but the banks are going to want to wait, and they have until Nov. 14 to join the program,” said Edward Yingling, president and chief executive of the American Bankers Association.

“There are still questions about what it all means, and what the specifics are. This has moved so fast, as you peel the onion you find another question that leads to another.”

The banks being pulled into the government investment plan will receive $125 billion. They include Citigroup, Goldman Sachs, Wells Fargo, JPMorgan Chase, Bank of America, Merrill Lynch, Morgan Stanley, State Street and Bank of New York Mellon. Merrill is being acquired by Bank of America.

The banks did not return telephone calls or declined to comment.

The other $125 billion will be doled out to the rest of the nation’s banks on a volunteer basis. Analysts said it’s difficult to tell how many publicly traded banks would go to the government.

Tim Ryan, president and CEO of the Securities Industry and Financial Markets Association, warned investors not to leap to the conclusion the plan will deal a devastating blow to how Wall Street does business.

“When things like this happen, people think it’s the worst or it’s the best and that we’re going to get massive change,” he said.

“I’d be careful about that because I don’t think there is going to be massive change. The global capital markets will continue to exist, capitalism as we know it is going to continue to exist.”

Encouraged by the plan, investors sent most bank stocks rallying Tuesday. Some of the biggest gainers were regional banks, which have been particularly battered by the ongoing disruption in the housing and credit markets.

Analysts upgraded the ratings on several regional bank stocks to “Buy,” on expectations that share prices will improve as capital begins to flow back into the sector.

Dana Johnson, chief economist at Comerica Bank, labeled the government’s efforts as effective crisis management.

“If this were not done, it could have warranted the term depression,” he said of the economic environment. “Banks are going to be better capitalized. They will be able to borrow. This is going to make credit a lot more available and somewhat less expensive over the coming weeks.”