(CEP News) - The U.S. government plans to buy passive shares in financial firms, according to Treasury Secretary Henry Paulson, who said the Bush administration is developing a "standardized program" allowing the U.S. to purchase equities in "a broad array of financial institutions."
Taking an equity stake is authorized under the recently-approved $700 billion rescue package to purchase toxic mortgage assets from troubled institutions. The Treasury will likely inject funds into financial institutions in exchange for preferred shares in the hopes it will free up lending capital.
The action will mark the most direct government action into financial markets since the Great Depression. The program aims to complement private funding by restoring confidence. Paulson announced the plan as the Group of Seven finance ministers released a five-point, joint-action statement to restore market confidence on Friday. read more
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