Critics warn of bailout feeding frenzy

WASHINGTON, Oct. 29 (UPI) -- Expanding the recipients of U.S. financial bailout funds to include regional banks, automakers and others could produce a chaotic feeding frenzy, critics say.

The U.S. Treasury Department has pledged to use part of the $700 billion in bailout funds authorized by Congress to buy at least $163 billion in preferred stock in banks. That move has caused an array of interests, including automakers, life insurers, stockbrokers, privately held banks and even hedge funds to compete for a piece of the pie, the Washington Times said Wednesday.

"There are already a lot of people sniffing around at this money, and it has the makings to become a real feeding frenzy," Bert Ely, a banking consultant based in Alexandria, Va., told the newspaper.

Critics fear awarding bailout funds to private companies won't result in enough public benefits, the Times said.

U.S. Sen. Charles Schumer, D-N.Y., said he's troubled by the Bush administration's move to purchase bank stock, saying, "I remain especially concerned that, in the Treasury's zeal to make the program easily digestible for the banks, we're feeding them a little too much dessert and not making them eat enough of their vegetables."