The United States is expected to inject $250 billion to shore up the banking system and take stakes in nine top financial institutions, media reports said today.
The details are expected to be announced on Tuesday morning (around 1800 hrs IST) but the Wall Street Journal identified the institutions as Goldman Sachs Group, Morgan Stanley, J P Moran Chase and Co, Bank of America, including soon to be acquired Merill Lynch, Citigroup, Walls Fargo and Co, Bank of New York Mellon and State Street Corp.
The government is set to buy preferred equity stakes in these institutions.
Some of the big banks, the Journal said, were unhappy about the government taking equity stakes, but acquiesced under pressure from Treasury Secretary Henry Paulson in a meeting yesterday.
During the financial crisis, the government has steadily increased its involvement in financial markets, culminating with a move that rivals the breadth of the government's response to the Great Depression, the paper said.
It intertwines the banking sector with the federal government for years to come and gives taxpayers a direct stake in the future of American finance, including any possible losses.
Other elements of the plan include equity investments in possibly thousands of other banks; lifting the cap on deposit insurance for certain bank accounts, such as those used by small businesses; and guaranteeing certain types of bank lending. It builds on an earlier plan to buy up rotten assets dragging down banks, which failed to calm investor fears, and follows similar moves by major European countries, the paper said.