The US government has announced a plan to buy shares in several major banks, in order to boost stability in the banking sector.
President George Bush says that this is a “short-term measure to ensure the viability of America’s banking system”.
Some $250 billion of the $700 billion rescue package confirmed last week will be used to purchase shares in nine institutions.
A limit of $25 billion per bank will apply, with President Bush keen to assure spectators that the plan will not threaten the free market.
“This is not intended to take over the free market, but to preserve it,” says Bush.
Treasury secretary Henry Paulson echoed the president’s sentiments said that the money would be going to “healthy institutions”.
“Government owning a stake in any private US company is objectionable to most Americans, me included,” says Paulson. “Yet the alternative of leaving businesses and consumers without access to financing is to tally unacceptable.”
This follows a similar announcement in the UK yesterday, where the government pledged to buy shares in Royal Bank of Scotland, HBOS and Lloyds TSB.
D.C.