President George W Bush President Bush on Tuesday announced details of a dramatic change in the $700 billion plan to rescue ailing financial firms, with the government quickly using up to $250 billion to buy stocks in banks.
The government will temporarily guarantee new loans between banks and offer to insure unlimited deposits in accounts that do not pay interest.
The new guarantee goes beyond the $250,000 federal insurance that generally applies to bank deposits.
Executives of the country's biggest banks were summoned to a remarkable meeting at the Treasury Department to hear the plan. Treasury Secretary, Henry Paulson, basically told the bank CEOs that they had to accept the government stock purchases for the good of the U.S. economy.
Government stock purchases would quickly give banks cash to shore up their balance sheets and encourage them to lend to each other, and to businesses and consumers.
Among those said to be in line for government investment are: Citigroup, Wells Fargo, JPMorgan Chase, Bank of America, Morgan Stanley, State Street, Merrill Lynch, Bank of New York, Mellon and Goldman Sachs.
From Felix Dela Klutse, Philadelphia, USA