The US Treasury has announced plans to buy shares worth $250 billion in ''healthy'' financial institutions to help shore up the financial sector.
Under the U.S. Treasury plan, the government will buy preferred shares in qualifying financial institutions, with stakes in each limited to $25 billion.
U.S. Treasury Secretary Henry Paulson said 9 banks described as "healthy institutions" had agreed to accept government stakes for the good of the
"Government owning a stake in any private
President George W. Bush called it an essential step to ensure the viability of
Federal Reserve Chairman Ben Bernanke promised continued action to stabilise financial markets.
"We will not stand down until we have achieved our goals of repairing and reforming our financial system and thereby restoring prosperity to our economy," he said in a statement.
The Treasury will buy stakes in Bank of America, Wells Fargo, Citigroup, JPMorgan Chase, Goldman Sachs, Morgan Stanley and Bank of New York Mellon Corp, two sources said.
Media reports said State Street Corp and Merrill Lynch would also receive a capital injection.
Similar moves in
"Day The Markets Breathed Again" ran the headline in
Even the Gulf with its oil revenues is acting. The
"We see light at the end of the tunnel, but we are not there yet," European Commission President Jose Manuel Barroso told a news conference.
STOCKS SOAR BUT RECESSION A THREAT
Stock markets gave a thumbs up to government action.
"Investors are peeping out of their bomb shelters," said Sean Callow, currency strategist at Westpac.
Many stock markets shed as much as 20 percent last week as panic gripped and experts said while financial meltdown may have been averted, the threat of a wide and deep recession had not.
German investor sentiment declined sharply this month, the heavyweight ZEW research institute survey showed, although many responses were given before
"The perspectives for the economic development in
The French economy contracted 0.1 percent in the third quarter, the Bank of France said and British inflation hit a 16-year high of 5.2 percent in September, although the Bank of
Former U.S. Federal Reserve Chairman Paul Volcker said the world's biggest economy was already in recession.
Trouble lurks in smaller economies too.
MONEY MARKETS EASIER
Some relief was evident in money markets.
Libor rates for overnight dollars were fixed at 2.18125 percent, down from 2.46875 on Monday, while the interbank cost of borrowing three-month dollars had its biggest fall since March and three-month euros charted the largest fall this year.
In Britain, banks bid for less than half the 40 billion pounds of three-month cash offered by the Bank of England, suggesting the clamour for funds there had been reduced by the
government's bank recapitalisation plan.
But some 600 banks hoovered up 310 billion euros at a European Central Bank auction, rather than run the risk, as they might see it, of lending to each other.
Bush also said the Federal Deposit Insurance Corp will insure most new debt issued by banks and expand insurance to cover non-interest bearing accounts. He insisted the
government's steps would be limited and temporary.
That move appeared aimed at unlocking credit markets.
Date created : 2008-10-14