Washington, D.C. – President Bush on Tuesday announced a $250 billion plan by the government to directly buy shares in the nation’s leading banks, saying the drastic steps were “not intended to take over the free market but to preserve it.”
Nine major banks will participate initially including all of the country’s largest institutions, he announced, in a move that sent stocks soaring on Wall Street.
Some of the nation’s largest banks had to be pressured to participate by Treasury Secretary Henry Paulson, who wanted healthy institutions that did not necessarily need capital from the government to go first as a way of removing any stigma that might be associated with banks getting bailouts.
“We regret having to take these actions,” Paulson said. “Today’s actions are not what we ever wanted to do – but today’s actions are what we must do to restore confidence to our financial system.”
It was the latest in a long series of moves taken by the administration and the Federal Reserve over the past several weeks to prop up a weakening financial industry. The economic picture in the United States had been darkening for months, but the slump took on new urgency – and had greater global repercussions – amid record-setting selloffs on Wall Street and enactment of a $700 billion bailout bill.