US Treasury will make available $250 billion to the nation’s banks, nine banks have already been identified. This was announced by US Treasury Secretary Henry Paulson Jr. He said that this injection is required to restore confidence in the market and avoid a collapse of the financial system. The announcement came shortly after President George W. Bush spoke about similar proposal.
Apart from injecting money into the banks US will also guarantee new debt issued by banks for 3 years. This is a measure to encourage the banks to resume lending. Federal Deposit Insurance Corporation (F.D.I.C.) will also offer permanent guarantee on bank deposits in those accounts that do not bear interest.
The $250 billion will come from $700 billion bailout approved by Congress. Half of $250 billion will be injected in the nine identified banks, including Citigroup, Bank of America, Wells Fargo, Goldman Sachs and JPMorgan Chase. The remaining money will go to smaller banks and thrifts.
Apart from injecting money into the banks US will also guarantee new debt issued by banks for 3 years. This is a measure to encourage the banks to resume lending. Federal Deposit Insurance Corporation (F.D.I.C.) will also offer permanent guarantee on bank deposits in those accounts that do not bear interest.
The $250 billion will come from $700 billion bailout approved by Congress. Half of $250 billion will be injected in the nine identified banks, including Citigroup, Bank of America, Wells Fargo, Goldman Sachs and JPMorgan Chase. The remaining money will go to smaller banks and thrifts.