In a press conference earlier today, President George Bush revealed that after meetings with G7 leaders the USA decided to also buy equity shares in its banks, in an attempt to restore confidence in lending.
The US will use $250bn of taxpayers’ money, taken from the original $700bn bailout package.
Bush said: “This is a co-ordinated plan of action…leaders in Europe have already gone ahead with the plan in a wise and timely manner. They have the full support of the United States.”
The President revealed that the Federal Reserve will also be the last resort to buy up commercial paper. There will also be an extension to the Government’s deposit insurance to the accounts of US small businesses.
The President stressed that the plan was created as a short-term solution and will make sure the nine banks which have signed up will buy back the shares.
US Treasury secretary Hank Paulson says the move was: “objectionable to most Americans, including myself.”
“We regret taking these actions, but we must do this to restore confidence in the financial system,” he added.
US reports indicate that the nine banks signing up are Bank of America, Wells Fargo, Citigroup, JP Morgan Chase, Goldman Sachs, Morgan Stanley, New York Mellon Corp, State Street Corp and Merrill Lynch.